Comcast’s Great Quarter May Spell Bad News for ESPN

Comcast, the largest cable provider in the US, added 89,000 new cable TV subscriptions in the fourth quarter of 2015. While that may be good news for Comcast—it's the highest number of cable TV subscription additions it's made in the past eight years—the nature of the additions may signal trouble ahead for cable networks most vulnerable to the effects of cord cutting.

There's a few reasons why Comcast was able to add so many cable TV subscriptions in the quarter, according to Fernando Elizalde, an analyst at the Gartner research firm. According to Elizalde, mere seasonality likely played a role, with people tending to watch more TV in the winter months than they do in the summer. Another factor could be the launch of Stream, Comcast's internet-based television service that offers a select number of channels for $20 per month. It's largely similar to Dish Network's Sling TV except that it doesn't count against broadband data caps, which Comcast has expanded in recent months.

Also unlike Sling TV, Stream does not include ESPN, the Disney-owned sports network that was forced to lay off some 300 employees last fall amid falling revenue. If consumers in the future don't outright cut the cord but instead opt for so-called "skinny" bundles (so called because of the relatively few number of channels on offer) like Stream, it could still hurt ESPN while not necessarily hurting Comcast. One analyst, BTIG Research's Rich Greenfield, called the increased adoption of skinny bundles "troubling" for ESPN, appending the hashtag "#goodluckbundle" to a tweet.

For now, however, Comcast is all too quick to point out that the traditional cable TV bundle is not in danger of going away anytime soon, with NBCUniversal CEO Steve Burke telling analysts that the bundle "is going to continue to be a very good business for a very long time." But that's easy for Comcast to say, given that it prints money whether you subscribe to cable TV or to broadband. ESPN, however, with its expensive sports contracts, has no such luxury.