The reason Comcast is bucking the cord-cutting trend

Comcast has grown market share each quarter since the X1 platform reached 30% penetration in 2015

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The first quarter of 2017 proved not to be a good one for media companies faced with the impact of cord cutting. But Comcast Corp. CMCSA,  is one company that may be well positioned to embrace the blow.

During the first quarter, subscriptions in the industry declined, according to Jefferies analysts led by Mike McCormack, and with new online live TV streaming platforms from Google’s GOOGL,  YouTube and Hulu — jointly owned by Comcast, 21st Century Fox Inc. FOXA, Walt Disney Co. DIS, and Time Warner Inc. TWX,  — the second quarter is likely to further investor concerns.

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“While the first quarter is traditionally a strong quarter for video, first quarter 2017 was anything but,” McCormack wrote in a note to clients. “Nevertheless, Comcast has proven remarkably resilient, and was the only major provider to add subscribers in the first quarter.” Comcast added 42,000 video subscribers in the first quarter.

The reason Comcast has been able to buck the trend is its X1 set-top box and platform.

X1 is Comcast’s “next-generation” cable set-top box that connects to the internet and has a more intuitive user interface.

Jefferies analysts estimate video churn — people cutting their subscriptions — has dropped more than 20 basis points in the last two years, with every 5% of incremental X1 penetration reducing churn by two to three basis points.

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Comcast’s X1 platform brings TV and the internet together for a unique entertainment and communications experience.

“Comcast’s versatile platform has driven higher engagement and a better user experience, while the integration of Netflix and YouTube should only further help churn,” McCormack wrote. “In our view, the higher retention separates Comcast from the rest of the video pack.

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“Notably, since X1 reached 30% penetration in the third quarter of 2015, the company has grown market share each quarter, cumulatively adding nearly 300,000 subscribers vs. an industry loss of about 425,000.”

Comcast shares have gained nearly 18% in the year to date and more than 30% over the last 12 months, while the S&P 500 index SPX, is up 8% in the year and more than 15% in the prior 12-month period.

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