Good morning, ladies and gentlemen, and welcome to Comcast's First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note that this call is being recorded. I would now turn the call over to Senior Vice President, Investor Relations, Mr. Jason Armstrong. Please go ahead, Mr. Armstrong.

Thank you, operator, and welcome, everyone. Joining me on this morning's call are Brian Roberts, Mike Cavanagh, Steve Burke and Dave Watson. Brian and Mike will make formal remarks and Steve and Dave will also be available for Q&A. As always, let me now refer you to slide number two, which contains our Safe Harbor disclaimer and remind you this conference call may include forward-looking statements, subject to certain risks and uncertainties. In addition, in this call, we will refer to certain non-GAAP financial measures. Please refer to our 8-K and trending schedules for the reconciliations of non-GAAP financial measures to GAAP. With that, let me turn the call to Brian Roberts for his comments. Brian?

Thank you, Jason, and good morning, everyone. We were off to a terrific start in 2018 with first quarter revenue growth of over 10% and healthy EBITDA, earnings per share and free cash flow. I'm really proud of these results, which reflect strength across all parts of Comcast NBCUniversal. We have such a special company with a collection of scaled businesses, each executing at a high level and substantial opportunities for continued growth led by our margin accretive segments. We have a business model that works well, and we see more and more of our peers attempting to pivot towards a similar strategy of integrating distribution and content. We think our team has done a great job of this, particularly with NBCUniversal, as you can see in today's results. This successful execution led us to make an announcement earlier this year that further strengthens this strategy with our proposal for Sky. This morning, we're excited to take the next logical step with a formal binding cash offer for Sky. The terms are consistent with what we already outlined in our 2.4 announcement and Mike will provide some additional color on this later. So let me turn now to our strong first quarter results. Starting with Cable, our connectivity businesses, including residential broadband and business services are now at a nearly $24 billion annualized revenue run rate combined, growing over 9% with significant runway ahead. We are confident in our outlook for high-speed Internet subscribers as the total market continues to grow our homes and businesses past steadily increase and our focus on product innovation and differentiation through speed, coverage and control elements enables us to continue to grow and take share. In business services, we're making nice strides in our newest segment serving enterprise customers and also continuing to gain…

Thanks, Brian, and good morning, everybody. Let me start by providing the details on our Sky announcement, which is a binding cash offer known as a Rule 2.7 firm offer under the UK Takeover Code. The key terms are consistent with our original proposal back in February, an all-cash offer for £12.50 per share and acceptance condition of 50% plus one share. Our various intention statements related to investment in the UK are all consistent with the Rule 2.4 announcement. And our commitment to Sky News has been strengthened with a pledge to establish an independent Sky News editorial board, maintain investment, and to not acquire a controlling interest in any UK newspapers. In terms of process, in the near future, we'll file for EC antitrust approval, which would kick off a 25-day Phase I review. We still expect to complete all regulatory reviews in a timely manner so that Sky shareholders will be in a position to review our offer without any regulatory concerns attached. In terms of the financial and strategic merits of the transaction, let me add to what we have said before. We believe this is a financially attractive transaction. New information in the 2.7 announcement today is a synergies estimate of around $500 million achieved through a combination of revenue benefits and recurring cost savings across the combined company. These are expected to be achieved through optimizing Comcast and Sky's complementary operations with only limited impact on head count expected. We believe those synergies, combined with the strength of Sky's standalone business, which we've spent more time studying, makes this a compelling transaction based on a variety of measures. To reiterate what Brian mentioned, we evaluate all opportunities against alternative uses of capital. This includes buying back our stock, investments we make in our own…

Okay, thanks, Mike. Regina, let's open up the call for Q&A, please.

Thank you. Our first question comes from the line of John Hodulik with UBS. Please go ahead.

Okay, thanks. Maybe to focus on the strategic topic. Brian, as you said, you're seeing increasing competition in the video market here in the U.S. And with the Sky transaction, you will be purchasing an asset that is primarily a satellite TV distribution company. Is there reason to believe that the video market in Europe will not evolve similarly to what we've seen here in the U.S.? And then number two, as a follow-up, just if you could give us any color on the $500 million in synergies, or any more details would be great. Thanks.

Thank you, John. Look, they're very different markets. Obviously, video and television have many similarities, but you really have to do the work and look at the competitive situation, dynamic, the future potential for competition. And I think the markets are just coming from different vantage points. Also, Sky has a terrific programming business, content creation business, over-the-top business. And so we looked at it and continue to look at it, look at their quarterly results, which they posted last week. And they also are in the broadband business in the UK. And they made announcements that they intend to do so in Italy. So we are impressed with just the continuing momentum at the business, the ability to have a content and distribution company that looks very similar to Comcast NBCUniversal. Mike?

So on synergies, John, $500 million, it's the same categories, I'd say, that we flagged that we expected to see when we did the 2.4. But it's about $300 million of expense side, $200 million of revenue synergies. On the expense side, just think about the amount of third-party spending the two businesses at our scale does. And then the ability to get some efficiencies across the two companies in some of the more administrative and production side of things. All that $300 million represents such a small percentage of the overall expense base that we're not too – we're confident that's gettable, as we said earlier. And then on the revenue side, it's again $200 million. When you think, again, about the ability to add to the power of monetization of Sky content in the U.S. and to some degree NBC content elsewhere, together with the strength of what we can do in producing new originals together is what gets you to those combined $500 million or so.

Okay. Great. Thanks guys,

Thank you, John. Next question, please.

Your next question comes from the line of Craig Moffett with MoffettNathanson. Please go ahead.

Yeah. Hi. I mean I'll stay with the strategic theme as well. So, I guess, my and most people's reading is that your interest in Sky and Fox signals a view that the scale required for the next generation of media is likely to be much, much greater. First, is that right? And is the production side of that business, does that require much larger scale, hence (33:04) perhaps more than just Sky, but a real kind of addition to the studio? And then if that's a global concept, I wonder if you could revisit your thoughts about how the U.S. fits into that with a sort of direct-to-consumer platform outside of your existing footprint?

Okay. Well, thank you, Craig. Let me start by saying, because there has been some commentary around this question of strategic intent, is that love our core businesses. And anybody who is viewing this as some divergent from that is not reading us properly in my judgment. We didn't choose to put Sky in play or any other asset in play. That event happened around us. And the question is, do we take a look at it and engage? And as we have done the work and in M&A generally, as Mike just articulated, and I tried to earlier, what are the reasons to do it and what are the reasons not to do it? And we look at all of that. And we think we are disciplined. We think we have a great track record. Nobody is perfect. But I go back to NBCUniversal and say we didn't have to do that. And at the time, there was what's the strategic rationale and other things. In the end, you want to buy it right, you want to operate it right, and you want to make a strategy and a growth trajectory for your company that's better than without it. And that's how you build an organization over 50 years. And so in the question of scale and looking at the future, again, I don't think we have to do this. I don't think international is broadly is a strategy. I think it is a unique asset in Sky's case that fits well within the mix of businesses we have already got, and is aligned with our existing strategy of integrating content and distribution. And a benefit is that you will get new geographies and additional scale, which gives you optionality for future things to consider, not a requirement or a necessity.

Thanks, Craig. Next question, please.

Your next question will come from the line of Jessica Reif Cohen with Bank of America Merrill Lynch. Please go ahead.

Thanks. I'd like to maybe switch gears to NBCU. And I don't know if Steve is on the phone, but just a question or two is, as you approach the upfront, what will be different this year in how you sell those or how buyers view the market? Or how the marketplace occurs, whether it's targeting or demos or digital versus linear? And then secondly, could you comment on the health of the movie business? And any changes in distribution with the Fox-Disney deal combination pending. Does that change premium video-on-demand or the potential premium video-on-demand?

Okay. So this is Steve. First on advertising, we're entering the upfront, which is two weeks from Monday is our presentation. It's amazing how quickly it comes every year. But we are entering the upfront in the strongest position we have since we arrived seven or eight years ago at NBCUniversal. If you look at NBC, we are over 40% ahead of the number two network in ratings. We had a very, very high percentage of the big nights in television between the Olympics and the Super Bowl, Golden Globes. We have a very, very strong schedule. And scatter for the last two or three quarters has been quite strong. The first quarter was the strongest quarter for scatter that we've had in a while. It's too early to say what the second quarter will be. But I think we have the cards to enter the upfront in a stronger position than we have in many years. In addition, there is a pendulum swing that happens between traditional linear broadcast and cable and digital. And I think for a whole variety of reasons advertisers are coming to the conclusion that that pendulum ought to swing back in our favor. It's not to say it definitely will, but there's certainly signs in people that we've talked to of a coming home to a trusted environment where an ad can be in context, where an ad can be watched the way people watch television ads from the beginning until the end. And behaviors change and brands are built and businesses succeed. So for all those reasons, the strength of our portfolio, in general, but in particular with NBC and also the strength of the market and the pendulum coming back to television, I am really looking forward to a very robust upfront.…

Thank you.

Thanks, Jessica. Next question, please.

Our next question comes from the line of Ben Swinburne with Morgan Stanley. Please go ahead. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you, good morning. I have two questions. Mike, I think, I just wanted to go back to your comment before, you talked about where your stock is today and that it's a currency. To make sure we're hearing you right, it sounds like you are sort of taking any equity finance deal off the table at the moment. And then related to that, can you just remind us sort of how far you would take the leverage or the company is comfortable taking leverage up through acquisitions? Just so we can put some kind of parameters around there? And then I have a follow-up for Dave.

Sure. I don't really have much to add to what I earlier said. I mean, obviously any comment like that is subject to facts and circumstances at the moment. But since I have been getting the question about would we or wouldn't we in a variety of different possible scenarios, I guess, in people's minds, just want to make personally the point that I don't see us using stock at these levels. So that's the point I was making earlier, really in response to a question that I have been getting. In terms of does that necessarily mean we can't do anything, no, because the follow-through on that is the strength of our balance sheet and the history of being able to take advantage of the strength we keep in our balance sheet if something makes sense, which just ties back into what Brian said earlier about how we look at opportunities. And we are trying to always consider situations where if we can add value on top of the existing business, we view it as our job to try to do that. I wouldn't throw out any parameters for where we would or wouldn't go, other than the idea would be we like the leverage that we have and the strength of the balance sheet. And would be intent if we ever temporarily increased our leverage to bring it back to the neighborhood it's been operating in in a reasonable period of time. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: That's great. And then, Dave, just on the broadband business, as AT&T upgrades their network, deploys more fiber, can you talk a little bit about how your flow share sort of trends over time? Do you see any marked differences in Comcast's ability to grow the business as they upgrade their DSL plant and even U-verse plant to more fiber? And are you doing anything around Verizon's 5G deployments in terms of just preparing the business or your customers for their deployment later this year? I realize the markets aren't all announced yet, but I'm just wondering how you are thinking about that.

Well, Ben, first off, I think you go through competitive cycles. And certainly we saw that earlier with AT&T moving more of their DSL footprint over. Once these adjustments happen, you level off. We make some adjustments to how we go to market and then there is sort of the new normal that exists. And what we are seeing is we have great momentum. We really like the trajectory of our broadband business. So we had a good result, as you all saw with the 379,000 new high-speed customers. And we think there is more room here. There's more room in share, there's more room in terms of how we approach the marketplace. So when you look at – Mike and Brian talked about the overall market growth in terms of broadband, in terms of homes passed. From our standpoint, when you go up against a lower-end broadband, I mean, how we are talking about how we compete, we talk about connected devices, how much consumption is going on. And our focus on providing a superior speed, coverage, and controlled answer to the broadband marketplace, I think, is working. So from our standpoint, you go through it and there's an opportunity to win some customers back that maybe are testing the waters. But I think our network is really designed and has great opportunities to scale around this new market. We increase the capacity every 18 to 24 months. And so I just feel that not all broadband networks are created equal. We have a great network designed, I think, to help us compete with more consumption. And in 5G, we're paying close attention to it. We are testing our own results in terms of what this can do. And we still feel that I think it could be a…

Thank you, Ben. Next question, please.

Our next question comes from the line of Jonathan Chaplin with New Street Research. Please go ahead.

Thanks. I'm wondering if you can give us a little bit more context on trends in the wireless business this quarter. So if the $189 million losses that you reported, associated with wireless, how much of that is sort of one-time costs associated with getting the business started versus sort of ongoing costs? And then how does the cost profile of the business change now that you have the JV with Charter, where they are covering some of the platform development costs? And then finally, when do you expect the pace of net adds to start accelerating as you upgrade the stores and get your sales channel really behind the product? Thanks.

So, Jon, it's Mike. I'll start and then I'll let Dave take over. But I actually feel pretty good about the 198,000, I think, line adds to close to 600 (46:40) thus far. We feel pretty good about the launch. But in terms of the expenses, the $189 million of EBITDA losses, in line with what we had guided. We had several hundred million of losses last year. It will be a few hundred more this year. And that is really as we are acquiring customers and ramping the business. We also have to cover expenses of just getting a business started, from marketing departments, technology departments, the like, just core infrastructure. We will get some benefit in our deal with Charter of bearing some of those costs together. And in terms of where we go from here, I'll let Dave comment. But as we always said, when we get to scale in the business, we'll be able to cover those costs and be NPV-positive on a per-customer basis once we get to scale.

Well, so on – as Mike said, I think we're off to a really good start in mobile. It is early, launched last May. I think the consumer response to the choice of By the Gig or Unlimited is working. And it's still early in terms of how we expand distribution. And you mentioned kind of where we're at with that. We've launched now completely our retail stores. We didn't have to add a lot of retail stores, we just converted our existing stores and providing the capability to sell mobile in them. So that's going very well. We continue to press, I think, a very good digital solution. And we're just now beginning to package mobile solutions with broadband with other options. So I think it's relatively early, but we like the early trajectory of that. On Charter, just one other comment, given the amount of alignment and how we both look at the business, this is just, I think, a really logical next step. And so, as Mike mentioned, it helps us reduce costs. But I think it's even more than that. It's a really – it has the potential to be a really good operational partnership. We're both focused on back-office operations, really critical to how you scale this new business. And having Charter at the table thinking through the right answers to how we scale it, I think, is going to be a good help. So it reduces costs, it's efficient, it's a good thing. But I'm real pleased that we were able to bring this partnership forward.

Thanks.

Thank you, Jonathan. Next question, please.

Our next question comes from the line of Scott Goldman with Jefferies. Please go ahead.

Hi, good morning, guys. I guess, Mike, maybe just on the programming expense, probably a bit lower than most people were expecting. It doesn't look like you have a lot of major renewals going on this year. I know you've signaled that this year might be a little bit lower than perhaps the historical average. Wondering if that view has changed at all or how we should think about 2018 from a programming expense side of the equation. And then secondly, just maybe talk a little bit on the video side, what you're seeing in terms of vMVPD competition. How effective is Instant TV? I know it's probably early there, but how effective is that in terms of targeting some of the competition there? Thanks.

Sure. It's Mike. I'll start out. So as we said, we expected programming costs to come down to historical levels in this year after the couple of years of big renewals. So we're back in the land of regular escalators. And as I said earlier, that combined with some of the shift in mix of our customer base and some of the reductions in subs deflates the growth rate down, as a result, a little bit below the historical levels. So that's programming. We'll probably see trends similar for the remainder of this year, it's safe to say. And we'll come back next year with further annual guidance, but that's just on programming costs. And I'll let Dave comment on the competitive landscape on vMVPDs.

Well, no question, it's a competitive landscape. And don't see that changing, but we anticipated this as we saw it, thus your point on Instant TV, very much in line with our approach towards segmenting the marketplace. So still early on Instant TV. But again, similar to the question on broadband, once you see a fundamental shift in competition and the new – the virtual folks as they build a little bit of scale and get some customers, you have a real opportunity to win them back. And so our focus is to segment the marketplace. But our approach is to lead with the best-in-class video solution in X1 with broadband. We package, it gives the customer the best overall value when you do that. But part of this anticipated new competitive – more competitive landscape in video, we've continued to shift towards our connectivity business. And that has been absolutely part of our planning. As we look at the shift, it drives growth, both business services residentially, business services growing at almost 12%. There are share opportunities. Our focus is very much centered on broadband. When we start a package sale, when we talk to customers, we lead with broadband. And then we complete the package from that point on. This is how we're going to compete and win, I think, in the marketplace. And you look at the overall opportunity, we are generating nearly $24 billion in this connectivity business in annualized revenue. It's growing at 10%. This is where our focus is. We will not – we're going to continue to compete in video, and I think that we'll see how things play out. We're not going to just stop competing. We're going to absolutely be aggressive. But our focus has shifted towards the connectivity business.

Okay. Thanks, Scott. Next question, please.

Your next question will come from the line of Phil Cusick with JPMorgan. Please go ahead.

Thanks. Two follow-ups. Dave, you mentioned the shift to connectivity. Was there any pushback on the broadband price in this increase this year or any more than usual? And second, and if I can follow-up on wireless, can you talk about the contribution from bring your own device launching in the quarter and how effective that was? And what type of usage and spending are you seeing from customers, especially the earlier ones who have been around for a couple of quarters? Thank you.

So on broadband, Phil, in terms of rates, I would say at the highest level, we see that there is a real opportunity not just in share, but also in terms of how you reasonably price things. Our focus is to innovate. Just as we did with X1, we have really ramped up the ability years ago, focusing on mesh WiFi, great speeds, and then better control through the xFi app. And so I think when you do all these things, it adds up to just a really compelling value proposition where you can reasonably price and then compete with a superior broadband product. So I think that, again, not all broadband networks are created equal. If you are providing a better solution in broadband, your pricing can reflect that. So we're getting share, we can price reasonably. We are comfortable with that approach. And so in terms of wireless, I think it's too early. We just introduced the bring your own device. We like it. It's operationally working well. But it's a little early to go into any detail in terms of the usage metrics and the follow-up around that. But we'll get back to you over time on that.

Okay. If I can do one more on 5G, Brian, you mentioned continuing to work on this. What's your interest in either the millimeter wave spectrum auction later this year or maybe the CBRS auction next year? Thanks.

Yeah, I don't think we have any news today on that. When we're ready to talk about that, we will. But I think Dave's answer was pretty complete earlier on our view of 5G. Thanks.

Thanks, Brian.

All right. Thanks, Phil. We'll make this the last question.

Our final question will come from the line of Marci Ryvicker with Wells Fargo. Please go ahead.

Thanks. You mentioned in prepared remarks that you are offering the gigabit speeds in 90%, I think, of your homes. Can you talk about how many people are actually taking these speeds? Or is it still really, really early? And then, secondly, one clarification on the Charter JV. This is clearly different than the agreement you signed last year. So I assume there is no renewal of the prior-year agreement and that this, whatever was announced, is all encompassing? Or am I wrong there?

Well, first off, on gigabit, yeah, it is too early to talk about it. But we're primarily focused on just getting it rolled out. So that's the main thing, and putting it in a premium position. So it's a little early to talk about customers. On the Charter...

So, I just want to clarify you are not offering it to customers yet? You're just...

No, we are. We absolutely are.

Okay.

Yeah. No. It's launched and available 90%.

Okay.

So in terms of Charter, the aspect that you are talking about is still in effect and through May. But this agreement that we just talked is really for the operational partnership. And that's going to be the relationship that will carry forward.

Okay. Thank you very much.

Okay. And I just would add that I think great collaboration between ourselves and Charter and we'll keep informing you as that goes forward. But I just want to end by saying, Dave, you are doing a great job. Steve, the team is off to a strong start in the year. And we're looking forward to a great 2018. Thank you all for your support.

Okay. Thanks, everyone. Regina, back to you.

There will be a replay available of today's call starting at 12:00 PM Eastern time. It will run through Wednesday, May 2 at midnight Eastern Time. The dial-in number is 855-859-2056 and the Conference ID number is 2589896. A recording of the conference call will also be available on the company's website beginning at 12:30 PM Eastern Time today. This concludes today's teleconference. Thank you for participating. You may all disconnect.