Comcast's (CMCSA) CEO Brian Roberts Presents at Goldman Sachs 26th Annual Communacopia Conference (Transcript)

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About: Comcast Corporation (CMCSA)
by: SA Transcripts

Comcast Corporation (NASDAQ:CMCSA) Goldman Sachs 26th Annual Communacopia Conference Call September 12, 2017 10:30 AM ET

Executives

Brian Roberts - Chairman and CEO

Analysts

Brett Feldman - Goldman Sachs & Co.

Brett Feldman

All right. If everyone could please take your seat. We’re going to go ahead and we can get started here with our next session. We’re very happy to welcome back to the conference, Brian Roberts, the Chairman and CEO of Comcast. Normally, when we start off, I try to start up with a high level question, get a feel for the momentum of the business, and then we jump into things.

And I told Brain in advance, we’re going to do that and he came back and said, actually he had a couple of remarks he want to make. So I’m going to turn the podium over to him. He’s going to make a few comments and we’re going to sit down and do some Q&A. Brian?

Brian Roberts

Thanks, Brett. Well, good morning, everybody. It’s great to be back. It’s been a crazy weekend with the storms and the second storm that’s happened in the country and the Caribbean, and so I just want to begin by our thoughts go out to a lot of people who’ve been affected.

We have, for Comcast Cable, a fantastic response team in action that have been working and I think for people who’ve been part of the company for a long time, you’ll be very proud of how great a job they are doing. It also has affected our Theme Park, but I am pleased to say they’re going to open tomorrow, and it was very light impact to the Theme Park. Telemundo will also -- has affected Miami. And I’m very proud of NBC News and the coverage that we did to keep Americans informed.

So last week we’ve made some comments at a conference about the competitive environment, and I just like to put those a little bit in context and a bigger picture. And so, if I had a headline right now, it would be our company is in great shape, and so I thought what I would do is kind of drill into why we feel that way. Our investment in and our focus on innovation, the last 10 years or so is really paying off and there is no question, my opinion that we now have the best products in the industry.

Our management team is strong. They’re working well together. We have a terrific financial position, and I want to show you that. Clearly, there are competitive impacts of ebb and flow. We have been seeing that for many, many years and it is constantly a topic of conservation at conferences like this, and we hit a competitive patch this quarter in our opinion that was compounded by these two storms, and that’s had an impact on our subscriber numbers a bit and even though, as we said, our overall customer relationships increased.

So it’s an opportunity. I have a little bit of a conversation of how we manage the company and why are we doing it the way we are. But for those of you that have followed us for a long time, we thank you and who have follow the stock, you know we have a successful history of engaging, fiercely competing, and winning through lots of various cycles, and that’s what you’re going to see us continue to do.

So what I thought I would do to just help explain some of that, when you get past the Safe Harbor, is to just step back for one second and look at the last five years. Revenue and adjusted EBITDA, cash flow, 6.5%, 7.2% CAGR, consistency and a growing momentum. But the first half of 2017, the best first half we’ve had in six years and really one of the best we’ve had in many, many years, because of how we did it, and you’ll see here a 10% cash flow growth for a company our size, I think it is unprecedented, and it was across the board, great success.

If you look at how that came together, you’ll see that 5.8% is Cable, made up of XFINITY and Comcast business, but 23.5% at NBCUniversal. If you then look at the contribution, the growing diversification and the momentum we’ve had and the strategy we employed, if you take EBITDA minus CapEx, call that some proxy for free cash flow or net cash, you’ll see it’s even faster growth rate, so really excited by that.

So you say, okay, how are you doing this? So our kind of guiding principle is it’s not easy to pick a couple, is we want to be the leader in every market we serve. We talked about having the scale and why we’ve made some of the moves we’ve made to put ourselves in the leading competitive position.

Then you do the investment that we’ve been talking about for years about innovation, that’s also going right across whether it’s Theme Parks, whether it’s investing in shows or making decisions to buy content, work with various people, the customer experience that we have talked and made tremendous progress on.

And then we have a financially disciplined focus, and that’s part of why in 90 days I wouldn’t draw the most large conclusion because you can change that competitive dynamic from time to time, but our desire is to deliver consistent profitable growth, and then a culture in which all these businesses work together, so let’s look for a moment into the businesses.

So as I mentioned, customer relationships are growing and have continued to grow, and in some cases accelerated that growth, because of these best-in-class products. Now, we -- our roots are video, so we got to talk about video. It’s in my blood. It’s a critical product suite for us. But 20 years ago, Bill Gates said to me, some day you’ll have a bigger data business than you do video business, and we had zero data business at that time when he invested in the company.

So our platform is our real asset, but video has been the heart and soul of that platform. So we invested and created X1 and today I’m pleased that we announced that YouTube is now on all of the X1 homes, as Netflix before it and hundreds of thousands of on-demand choices and hundreds of linear channels and a voice navigation system and a great app and wonderful experience, and that product is the best in the world in my opinion and many others.

And then we need to segment that product, it may not be for everybody with all of our content that maybe too expensive for some people, and so we’ve gone to college campuses and we have a product that you don’t need a cable box for that we’re trialing and we have a lot of other segmentated ways -- segmented ways to appeal the different video markets. But at the core of it, we want the profitable end of the video spectrum, and that’s the market that we focused on.

The next three lines, for the most part, have been accretive to margins and these are products they came after video, obviously, the biggest one is internet, high-speed data. This will be the 11th year, 11th straight year we’ve added more than 1 million data customers and that is just fantastic and we see growth going for years into the future.

That product keeps reinventing itself. As one day, we are doing YouTube and 10 years ago, there was no iPhone and you go and think about the changes and how rapidly they have come the broadband space and the capabilities of what Wi-Fi means and what video means and what smart homes mean, our Internet business is really, really a fabulous business.

In fact, we have more data customers as Bill predicted, and the margins, because there is no programming costs, it’s a fantastic accretive business. XFINITY Home and our Comcast Digital Voice are part of the bundle and part of the innovation engine.

But overall, in business services on the column there, Comcast business, again we were either lucky or in the right place or due to investments and maybe some smarts, we now have a $6 billion run rate business in Comcast business that again is because these are higher paying customers with less volume are accretive to margins.

And one that we are now excited to launch is XFINITY Mobile. So we’ve spent the last few months launching it, it’s off to a great start, as you know on the Verizon network within MVNO, that relationship is going well and the product works, and we are pleased with the early results.

We only have two products and we can talk a little bit more in the Q&A, but today when Apple announces their newest iPhone, we like everyone else will find out about it and in some very short period of time, you’ll come into one of our stores and you will have the iPhone 8. And that will be a better value to many of our consumers than what they’re currently getting.

And so there is nothing but upside, and as we’ve said, our goal and I believe our reality will be – when we get to a certain reasonable minimal scale, every customer relationship will pay for its cell phone its own without any counting back to another product return reduction. So, there is only upside in XFINITY Mobile, we’re very excited by that.

Now, turning to NBCUniversal. Our strategy is to have top franchises, great creative execution and the execution that Steve Burke and the team have done is pretty spectacular. Let’s look at television.

I don’t think anybody has had the position in television in recent memory that NBC has right now. We’re number one again across the board. In prime time art, we have a 24% ratings lead over the next largest network. That’s the largest since 2007 and it’s hits like This is Us and World of Dance, two biggest shows returning franchises like The Voice, America’s Got Talent, which grew this summer.

In news, number one in almost every way you look at it. The Today Show, these are in demo what we sell to advertisers, Nightly News with Lester Holt, Meet the Press, and the incredible story, which has yet to really be monetized is MSNBC.

We’re now routinely beating Fox with the number one position in pretty much every day ahead of CNN. It is a surprising for many people to hear that because they probably haven’t looked at the numbers in a while, take a look.

If you move to, well, in sports. Let me just stay on sports for one second. We have a trifecta to mix sports metaphors coming up. We not only have Thursday Night and Sunday Night Football, the two biggest shows on television of any shows, but next year we have the Super Bowl, the Olympics and the World Cup in our company. We have the World Cup in Spanish on Telemundo and back to back we go Super Bowl right to the Winter Olympics.

We’ve made certain bets, not every bet. We partnered with a number of people we can talk a little more about it. So the lead that NBC and that has in television and the big night, big event strategy is why our advertising results were at the upfront, the strongest of anybody, why our momentum was 23.5% in the first half of the year, now we’ve got the Olympics that we comp against in the third quarter, but the business is, Steve and the team, Bob Greenblatt, many others, Mark Lazarus at sports, Andy Lackey at news, a terrific, terrific story.

Moving to Telemundo, again another under monetize the growth opportunity in the future, but an incredible turnaround. When we bought the company, we were well behind Univision and just most recently we are either tied or slight ahead in primetime ratings between Telemundo and Univision.

May be the largest come back in television in decades for one network versus another network on a sustained basis, and then next year the World Cup in Spanish comes to a platform that is now call it 50-50 market share with – in place where they never were before.

And Cable Entertainment, we are pleased that the number one news show in all of cable is The Sinner. It is continues to be an in USA and E and Sci-Fi and Bravo, our suite of cable entrainment channels continues to power cash flow and it has been a grower.

So, moving to Film, lot press this summer about the Film business, other companies have had some ups and downs. We’ve been in business with Universal 103 years, the three most profitable years are this year, last year and the year before, and this may well be the most profitable year in Universal’s history.

And 2018, we have Jurassic coming back and some other big titles Mamma Mia! and other things and continue have a slate out into the future with franchises, great animation and we’re excited by the Film business.

Parks, can’t say enough great things about the Theme Parks, I will talk maybe hopefully in the Q&A a little bit about them. But the cash flow has been double-digit, pretty much every year. We have an international growth story, new attractions, new hotels, fabulous team, we’re excited about the Parks.

That all means that you have the fastest growing media company in NBCUniversal with the 13% CAGR since we bought the company or announced we’re buying the company in 2009. So, that’s how it shows up in money and that’s why it’s a more meaningful part of the free cash flow and the EBITDA story at Comcast NBCUniversal.

So you put it all together, you have a significant free cash flow generation. What are we doing with that and we’ve returned much of it to shareholders. And through what we said this year, we plan to return just under $8 billion in 2017, $5 billion in buybacks and $2.9 billion in dividends. We’re trying to compete to win through innovation and differentiation. We focus on continue to deliver consistent profitable growth, back up balance. You will see some company’s results are really good at one, but not so good at another.

What we have try to do is have revenue growth, cash flow growth, free cash flow, subscribers, products, investment, it’s a balance. And you can always change that balance and finally a long track record focused on shareholder value and we really do believe the future is bright, look forward to having a conversation Brett about that. Thank you.

Question-and-Answer Session

Q - Brett Feldman

Okay, Brian. Well thanks so much for those remarks. I think that was very helpful, certainly frames the conversation. For the sake of just making sure we move past it, there’s the comments about the quarter and video, and you alluded to it. I think that your point was some quarters are more competitive than others. This happens to be a particularly competitive quarter and by the way two hurricanes made landfall this quarter as well. That’s really the message on what’s moving around and you’re not changing your fundamental view on the video business.

Brian Roberts

Yeah. I think if you look at a 90-day period, you shouldn’t change your strategy herky-jerky and same time you don’t want to not reflect changes in the market and competitive reality, so we’re looking at that. It’s mid quarter, quarter is not even over. So we’re transparent. I think integrity matter the most and we couple bad weeks and few months and we were in the middle of the quarter and the hurricanes were coming and we gave the answer and we will give much more clarity as we go forward.

But if you step back and don’t take a 90-day slice, if you took, let’s say, like the last trailing 12 months and you took the lowest, the biggest number we announced, we said, 100,000 to 150,000 videos, so we took the 150,000. For whatever reason, it is. And you talk to last 12 months, we’d be, I think, 50,000 subs down for the 12-month period, basically the same where we started. Our customer relationships will go up. Our cash flows up. Our revenues up. We don’t really see any change to any of that.

And so I’d like the way you were driving the car, we’re trying to find a balance and we will sort this out and we’ll discuss it with shareholders, but we feel really bullish about the product suite and the business of Comcast Cable, and we just felt that we should be transparent with where we were at.

Brett Feldman

And the remark about growth and customer relationships, presumably that speaks well to momentum in the broadband business?

Brian Roberts

We’re still adding broadband. This was a difference of the question, specifically where it’s going to be positive in video. We’re right around for the full year where we were last year. So, its – and there’s no question of broadband. We have a growing business, it’s continued grow.

But please don’t go to the sky, everybody will get broadband we hope someday, but we still believe there is plenty of growth left. We’re about 40 some percent penetrated. We’ve added a million customers for 11 straight years. We continue to see that momentum going and the value of each one of those customers. Now the ability to say, here’s a mobile device, you have to take broadband, that’s one of those things.

The other thing we’re doing in broadband is we created a new brand called X5. Similar to what we did with X1 for video. We’ve taken a lot of that team and we did two things with them. Some of them went into customer experience. So you can do everything. You can call us. You can use our app. You can get your appointment scheduled. You can reboot your cable box from your cell phone. Tremendous things are helping us stay connected to our customers right now during the storms.

The other thing we did, as we said, let’s take some of that innovation and apply it to broadband. So faster speed, but we have a commercial running right now, that’s one of the highest testing commercials we’ve ever had by in this space and that is you see a family having dinner two parents, two kids, mom says stop doing your phone and your tablet, we’re having dinner and kids keep doing it and suddenly you push your X5 button and the Wi-Fi shuts down.

And it’s a beginning to send a message that you can manage your broadband, you can, because your part of XFINITY, we’re giving you tools, it’s a same thing we did, it’s a page out of parental controls and what we did with the X1.

We’re going to do a lot more innovation in another great device we have is something that X5 Extenders. So, you get the new router works in your house, you go over, your printers now printing wirelessly, perfectly, you take, you buy in our store these beautifully packaged, we’ll be launching it shortly. You take the little extender, plug it in, boom, you are done. It will figure out your password, it will automatically mesh your network and now you have coverage.

Comes a little kit for four or eight, you’re in the store, by the way, here is the new iPhone 8, why don’t you play with it and see if you like to buy it. Here is the new Samsung device. We have changed how we are marketing and how – what that suite of products is and it goes to the value we’re trying to create which is in the bundle.

Brett Feldman

Got it. Let’s spend a little bit time on NBCU and I want to talk a bit about content. We are seeing more and more investment in original content from a variety of companies. And I’m interested in how you guys think about making that investment, both in terms of developing original content and paying for rights for things like sports, to make sure you have the right balance of growth drivers and profit drivers in the business?

Brian Roberts

Well, the original content investment in entertainment, we have put ourselves in that position, I just described where we are pulling ahead in a way that has not happened in television and Bob Greenblatt, who runs NBC Entertainment’s making some great decisions his team. Jen Salke, others, they’re going to have a – hopefully, just even being nominated for the Best Show in Television, with This is Us.

There is nothing else. I highly recommend people watch This is Us, if you haven’t. And then people say, I haven’t watched a broadcast show like that in a long time. Well, it’s not just ratings, it’s not just critics that liked it, it was the number one news show in all broadcast television that year. You take a show like that that powers other creative opportunities.

If you’d look at sports rights, which is where you make big bets, that not, This is Us in a bet, but when you’re in the billions, not even hundreds of millions, you really got to be judicious about those bets. And our thinking is that there is a big night, big event strategy. So to find it anyway you want, a 10 rating, have a more. If you, in primetime, if you look at it as triple the competition, the other three combined times three.

We’ve had different ways we look at it. Under one of those ways kind of at the big night, we’re going to have 24 of those and the next highest company has eight. We’re going to triple the amount, but last year it was even higher, because of the Olympics, we’re in primetime.

So, we have a point of view whether it’s Sunday Night Football, Thursday Night Football, certain big events and a lot of that is sports. That then allows when you go to see advertisers to have Must See TV and I think that is, as we look to 2018, we will continue to well outpace anybody else in that strategy.

And then there has to be financial discipline, you got to be willing to walk away from certain bidding and we have walked away from a lot of bidding in sports. So, we pick our places, it’s part of our strategy and however you add it up with and without sports, NBC is in first place, I would like what the team’s doing.

Brett Feldman

All right. So if we think about how to make sure you’re monetizing your content and we think about the cable networks. There’s obviously been some headwinds in that business. How do you think about ways of incrementally getting value? So, for example, working with virtual MVPDs or even a direct-to-consumer strategy for those assets?

Brian Roberts

Well, when we bought the company, we talked about a monetization gap and we’ve had lower affiliate fees. We had no retransmission fees and our advertising for the exact same eyeball. We were getting 15% to 20% less than CBS and others.

So one of the first orders of business was to not have that happen, so what do we do, not only have we gone from fourth place to first place in the cable networks, we took the cable advertising sales department and the broadcast team and put it under Linda Yaccarino and Matt Bond we took all of the affiliate relations and took a superstar from Comcast Cable and brought him to NBC. And we’ve done under Steve’s leadership an awful lot of progress has been made on monetizing.

Now, along comes new technological capabilities with direct-to-consumer and streaming a virtual MPVDs. NBC had license to everyone of the MPVDs – virtual MPVDs, all of our content, they’ve bought all our channels, our regional sports channels, our news channels, pretty much everything in almost all cases or in most cases at higher rates or the same rates. So if a sub goes there, we’re going to get paid. You’ll perhaps have more advertising capabilities because of the targeting nature, time will tell.

We’ve yet to see that be a big driver and back to the first conversation, we don’t think that that’s really changed much. But we don’t have perfect real-time data on that. These are other businesses, but our best guess is it’s slow at the moment, but it’s appealing to a different market. But we wanted to be there just in case, whether we want to set up our own brands, we’ve yet to see a business model where that is in the company’s interest, but we’re always open to thinking about things, but right now the ecosystem we are living in while yet it’s constantly having conversations and you can not try to evolve your product, we’re making our experiences better on each platform and that I think is the strategy that we can then drive higher fees.

And I just will end by saying, when we bought the company, we had $100 million in re-trans, we in 2016, it was well over a $1 billion. That growth, we just signed long-term agreements, the cable networks that monetization gap we believe has been narrow but not complete. So there is runway and momentum and that will be the second half of the year, but it also continued the years ahead, because of the contracts we signed and that’s the revenue engine of the company.

Brett Feldman

In terms of additional fees, obviously advertising is another key where you can monetize your content, you’ve done quite well at the upfront and so clearly the approach you’ve taken to monetize in that portfolio has been working, but there are certainly some headwinds in the traditional advertising market. So I was hoping maybe you could spend a little bit more time talking about how you see the broad advertising environment and then we can follow up on a few other things?

Brian Roberts

Well, I think, I can’t speak for everybody, I can speak about our own company, but I think, we had a really biggest upfront I think the company has ever had in this most recent upfront. We sold more upfront up 8% of our inventory than we did a year before. Our price was up. We have said around the same kind of number.

I think we were the leader in the upfront and it ties back to everything I’ve been talking about. You’ve got the goods. You’ve got better shows, better sports. You’ve got number one position and just as when we bought the company, we were lagging, now we’re leading, we still have room to grow, because we haven’t got a price premium, but we’ve got the highest increase I think of any of the major companies.

So, we also have digital offerings. We’re working with BuzzFeed and Snapchat and Vox to offer to our advertises along with Comcast on-demand and targeting ways to reach consumers using digital in ways we didn’t offer 24 months ago and we’ll do more of that in the years ahead. Obviously, there is a great opportunity in digital and we want to participate in that way even more than we do today.

But, all-in-all, the ratings decline gets offset by the CPM increase and the total dollars continue to be very stable and that’s critical and that happened again this year and in the scattered market, we’re seeing continued strength there. So, again, I know some companies may have different results just as our competitive advance on one business maybe different than somebody else. We feel really good about what happened at the upfront and where the advertising business is for the MVC properties.

Brett Feldman

Now earlier today, Randall Stephenson was up here talking a lot about how has he become more fully integrated particularly after they acquired Time Warner, their ability to do addressable advertising is really going to increase. You’ve been a fully integrated distributor of broadband provider and media company for a long period of time, what’s your view on how you’re positioned to really grow as addressable advertising becomes more important?

Brian Roberts

I think it’s a great opportunity and I think that even if other companies are embracing that opportunity, I think it’s kind of okay because – and maybe even good, better than okay, because you want advertisers to shift how they’re judging, how they’re advertising. There is one metric, Neilson is one way. It’s been doing at the same way a long time. The companies who have multiple venues to both give you data, give you interactive experiences and target experiences.

So, our company – it’s very hopeful, it’s hard, and we’ve made real progress and it’s a part of our upfront success is that we offer targeting and we offer time shifting and different commercials and a real-time insertion in some cases, but we have a long way to go to make progress.

And I think it’s a journey but with a good outcome for anybody who can get to that journey and it’s not one take all, because they have great properties, they’re going to sell ads on, so do we. We need the Procter & Gambles of the world, also want to buy it in a different and I think that conversations have been happening and having them join that conversation is probably, okay.

Brett Feldman

And you generally believe that all the intelligence that you have about the way people consume content because you are a distributor network operator, really is an under monetized long-term opportunities, just got to figure out to get it right?

Brian Roberts

Yeah. I think it would -- the more time I spend talking to the advertising folks who take a show, Tonight Show with Jimmy Fallon or shows that are out in digital in great numbers and many shows are there, and are you getting paid on the Facebook platform, no. And so, and are there advertising getting their value from some of those other platforms for what they say they’re getting versus what they are getting. There is a lot of swirl around those questions. I think we’ll be talking about this for a long time, and yes, there is – without any of that, we had a great year, everything we’re talking about would only make it better.

Brett Feldman

I want to come back to few other things you mentioned during your opening remarks. You talked about the success you’ve been having in the film and you’ve had a couple of blockbusters this year, you’ve even had some low budgets hits like Get Out.

Brian Roberts

Yes.

Brett Feldman

That was a great movie. How do make sure that you’re able to continue to do this momentum year after year and maybe as part of that can you give us an update on how DreamWorks is increasingly fitting into this strategy?

Brian Roberts

Well, I think, very legitimately people wondered when we brought NBCUniversal. Could you have a story like the slides that I showed six years later? And so, it’s a lot easier and with hopefully a little more confidence that we can say, yes, we’re going to – we’ve now got a management team, we’ve got a culture, we’ve got a marketing approach, we’ve got content, IP and that’s why we bought DreamWorks to add to that story, relationships with wonderful folks like Chris Meloni.

So the slate for movie business is always going to have lumpiness in it and I think investors are conditioned for that. But we’ve been making $1 billion a year for – this hopefully will be the third year around that kind of attitude. We bought the company with take a zero off of that. It was a very, very different looking business, our investment in Fandango consumer products.

Jeff Shell, who’s worked with Comcast for a long time is running the business along with Donna Langley and Ron Meyer’s assistance, and we just have had a great team. So we have a slate next year Jurassic comes back with Steven Spielberg. You got to feel great about that. That was one of the biggest movies of all time. The last Jurassic World, their sequels. We’ve got Mamma Mia! is coming back. The year after, we’ve got a slate building.

In DreamWorks case, Boss Baby and some of the movies that we inherited, it’s slightly better than we had expected. But some of the movies, they were working on, we didn’t want to continue on, we want to create new slate. So that animation takes three years or four years. So, it will take a little while but the TV business at DreamWorks is better than we expected.

Consumer products are working well together with the company and the work is underway. The team is there. We’ve hired leadership, promoted people. I feel good about the Film business and when you can sit here and say the three most popular years are last year, this year and the year before, and hopefully in the future, there is no reason not to be optimistic that we have figured it out.

And then you layered into the Theme Parks, you take something like DreamWorks and the characters. We’re building the DreamWorks Funhouse funnels in California at the Theme Parks there and the Jurassic and Fast and Furious attractions in Orlando in California. We have a relationship now with Nintendo to bring to any of the part you want. We’re starting with Japan.

And so that intellectual property that travels between the companies and whether we make a movie, a television show, a series, it’s that symphony that we have driven into the culture that I think is very different than how these immediate companies have been run. So we can feel better about a film because the way we market that film is unlike almost anybody else.

Brett Feldman

You mentioned Theme Parks. It means it’s been a consistent double-digit grower for the company. What do you have to get right to make sure you can maintain that kind of momentum and also if you can give us an update on Beijing as well?

Brian Roberts

Well. Like anything, it starts with a great management team. Tremendous consistency, Tom Williams and Mark Woodbury and many other people have been at Universal for their whole career and much of their careers. Comcast came in and we’re very comfortable making investments when we see IRRs with capital.

So we took the hotels for instance from less than 2,000 to 6,000, everybody who stays in one of our hotels rooms for a night, they go to the park an extra day, they spend all that money, eat the food, it’s a wonderful virtuous cycle. We will have another 800 rooms or 600 rooms to 800 rooms next year. We’ve a partner in that, so we’re not putting up all the capital in the attractions.

Each year, we add one or two, we had Jimmy Fallon this year, a new Volcano Bay water park for those with kids in that age. Come next year or later this year, it is – there’s nothing like it on the planet, I don’t think.

And then in Beijing, let me just start with Osaka, we bought the 100% control of Universal Japan and we are ahead of our forecast. In the early days we opened a Minions attraction, which blew past the internal forecast, shows again that synergy between film and consumer products, and Theme Parks and we’re taking all of that story to Beijing.

And I’ve been there several times, be there again, we have strategic relationship with our partners. It will take till another few years, three years or so to get it open. It’s a massive construction, we’ve toured Disney, they’ve got a successful experience to-date. And I think, it will be one of the most exciting endeavors and also build our ability to have a business in China, where as Comcast Cable, we couldn’t think about Japan and China and around the world, and now the company is building products and opportunities are going to come our way.

So, it will be a while, we’ll talk more about this as we go. But we’re clearing the land. It’s pretty amazing, about 1,000 acres eventually and Harry Porter and other initiatives that have been so successful in the U.S. and in Japan, in all likelihood come to Beijing shortly and we’re excited about that.

Brett Feldman

Earlier you mentioned XFINITY Mobile and how you recently launched, I think you actually announced last year at this conference that you’d be launching that product. So it’s great to see it in the market. I’m curious whether you have any incremental update on the rate at which your customer base is adopting that?

Brian Roberts

So we’re really pleased with the start. Just to remind everybody. It’s MVNO on the Verizon network. So we’ve a good relationship. It’s working well. You can activate it right away. We’ll ship it to you in 24 hours. You can pick it up. Get it by in a store, and there’s only two plants, really simple product. Maybe the most simple, elegant execution the company has ever had, really great packaging, really simple, $12 a gig or $45 unlimited. That’s it.

And when the new products come out like today, I believe we’ll have those products in all our stores and on our digital site, same time as anybody else. And what’s different and what’s so great about this competitive dynamic is there is no programming cost. The consumer gets the device, either rent it or they buy it, same price for everybody, pretty sure, that when you procure the devices. And then our $12 a gig, you can choose, all have an iPad and I have a phone and my kids have a phone and we’re up to five devices.

You can do so long as you’re a broadband customer of ours. So there’s a relationship that XFINITY Mobile is best of wireless and the best of Wi-Fi. And then we’ll hunt you out. We’ll save your money. We’ll give you the best connectivity, and oh, by the way, maybe, I’ll make my iPad $12 a gig, because I don’t use it very often and I’ll make my phone unlimited, because I use it all the time.

You can change by device in the middle of the month. You can get a real-time counter. Just click the button, now you switch from Plan 1 to Plan 2, and go back and forth. Majority of our customers so far are taking the By the Gig and that confirmed for us our instincts. Our marketing team did a super job and did a lot of research that that’s something customers can and will understand for – with as many devices as we’re all getting and they can always toggle and go to the unlimited.

These prices we believe bring real value to the customer on their bill. So the same customer with the same consumption and pattern would save money by taking our product. And we’ve also said that one of our guiding principles is that, every customer, once we get to some minimal scale, which isn’t a huge number, every incremental customer pays for itself and we either make money.

And therefore any synergy, any churn reduction, any broadband upselling, any other benefits are beyond the pure – flat out standalone economics. Back to our philosophy of trying to manage the profitable growth, it’s not growth for growth sake and that’s one point that disallows me just to comment on.

You’re bombarded with lots of different stories and you know your job, sort it all out, make your choices. Some have revenue growth, some have unit growth, some have cash flow growth, some have free cash flow growth, some are investing, some aren’t investing. We’re trying to be balanced and we’re proud of that balance, and we can always adjust that as we go.

And so as we looked at our wireless strategy, it was consistent with that theme. Let’s not just lose money on wireless and make up for it somewhere else. It’s a competitive business. We’re not going to have every customer. We are not trying to become something while we said we’re not looking with different ambitions. We are here at least today to try to and then probably for a very long time to take the fact that the bundle is where you get the best value as a consumer.

And if you have the best product in each of those choices, you’re going to build value for your shareholders and then wireless having the Verizon network is a wonderful relationship having the best, the newest Samsung, the newest Apple products and then to be able to put that in to our best broadband customers. Maybe that’s not for everybody, but if we can save your money on your bill and we can make money doing it, what better could there be.

Brett Feldman

You do have a partnership with Charter though to see if you guys can figure out the way where you can collectively do better with your standalone wireless strategies. Is there any update there, have you guys actually agreed to do something?

Brian Roberts

Well, I don’t have any news today. So what I can tell you is that our philosophy if you look at our behavior on X1 was to take some of our innovation, which cost a lot of money, even though we have I think industry leading margins because of our scale and to say to others, come along. So, Cox took X1. We most recently announced Videotron in Canada, that’s the third Canadian cable company to take X1. So, we pretty much have all of Canada.

So, when we looked at mobile, we’re not in a lot of markets. It would be great to share resources with Charter and that conversation’s undergoing – underway and I can’t predict whether we’ll do something there or not, it’s not going to slow down the rollout we’re doing.

One of the reasons we wanted to get going was to be ready for this launch. This is big moment for the next-generation products. We had to get our machine tested. We will put numbers up to you next year, I believe and give you real certainty as we hit some sort of real attitude of momentum, but so far all things are looking positive.

Brett Feldman

So for my last question here I want to kind of come back and touch on what was one of the last things you said during your prepared remarks, you were talking about cash generation. When we put everything that you said together, ultimately what is the right way for your investors to think about the trajectory of cash flow growth and capital returns to shareholders over the coming years?

Brian Roberts

Well, we have increased the dividend every year for a while, we have been very consistent with buying back shares and taking a – and in capital and investing in our business. And I can’t imagine we’re going to change that strategy. There can always be adjustments. We have $60-plus billion a debt. So we have an 8 credit rating.

We have resources that allowed us to buy NBCUniversal when times got tough, more will change. We bought NBC for about $26 billion. People said, buy more stock at that moment. Today AT&T is paying over $100 billion and I think the cash flow with NBCUniversal and Time Warner are pretty comparable.

So I think we have tried to layer into our experience over 50 years of being in business, making money for shareholders and being disciplined in doing it and returning that capital to shareholders and finding growth opportunities for the company. And I think, what’s most important is having the best products, best shows, best theme parks, best films and the best experience.

So, the first protocol is invest in business and your people, and then, hopefully again with the balanced approach, be a sustainable company the kind of numbers we showed in that ‘12 to ‘16, and right now and I hope continuing great momentum in the business. So we came here to say things are great and they are.

Brett Feldman

Great. We’re out of time, Brian. Thank you so much.

Brian Roberts

Thank you.