All right. Well, welcome everyone to day two of our Communacopia + Technology Conference. Before we get started with our first keynote session of the day, I need to briefly provide some important disclosures. We are required to make certain disclosures and public appearances about Goldman Sachs's relationships with companies that we discuss. Disclosures relate to investment banking relationships, compensation received, or one percent or more ownership. We're prepared to read aloud the disclosures for any issuer upon request. However, these disclosures are available in our most recent reports available to you as clients of the firm on our portals. Disclosures and updates to those disclosures are also available by ticker on the firm's public website. Also, the views stated by non-Goldman Sachs personnel do not necessarily reflect those of Goldman Sachs. All right, Brian, thank you so much for being here.
You are the longest tenured presenter at this conference, and so it continues to be a highlight of the year for us when you're here to do a keynote. You know, we typically start this conversation with a big picture view on how you see Comcast positioned, and we're gonna get to that. But I was hoping you could weigh in on some recent news, specifically the programming dispute between Charter and Disney. And really, Charter has just expressed their view that the video ecosystem is broken, and that the model that is proposed to Disney is a model it's gonna be pursuing with all its programmers. How do you see the relationship between cable companies and programmers evolving, and what do you think is a win-win model?
Well, first of all, great to be back, and it feels like school's back in session every year when we come here, and Labor Day is over, so hello, everybody. We certainly started the new season with some big news there. At some level, I guess I'm not completely surprised. When you have many distributors of the same product in a geography, you're gonna have disputes between the content and the distribution. It's not the first dispute and probably won't be the last dispute. Clearly, we all know the video ecosystem is changing. I think our company, and I'm sure we'll talk about this, I think we're really well positioned for that change, but change can have disruption. Ultimately, I hope people are looking at what is the consumer saying.
I think the consumer wants simplicity, somebody to help aggregate, and have the most bang for their buck. This dispute is putting, you know, tension around some of those issues. I hope they work it out. I think that's in the interest of consumers. I look at our company. We don't look at it as linear or streaming. We look at it as linear and streaming. The whole strategy, and I again, I bet we talk more about it, with Peacock and NBCUniversal and Xfinity is we are the best aggregator. We have all the streaming apps, all the linear, all in one place. At NBC, Peacock allows our media business to give even more value to a Peacock customer, with all the great content and some originals and lots of sports, all for a very modest fee.
So each company is dealing with their version of this transformational moment, and, you're gonna see some tension, but I don't have any more about that situation than what I've read in the press.
Okay. Well, thanks for that color. Let's zoom out for a little bit. You're well into a year where you've implemented a lot of changes at Comcast, including some new segmentation, and your organization structure, and even from a management point of view. Can you talk about how these changes fit with your vision for Comcast, and why do you feel confident you have the right assets and business models to be a leader across all your markets?
Well, we've been in business a long time, and we've had, I think, a really exciting history, but I feel very energized about our present and our future. We've broken the company into two groups: connectivity and platforms and content and experiences. It's simplified how we think of ourselves and actually how we manage ourselves. If you look at those businesses, there are six businesses within those two groups that are growing revenue in the first half of the year at 10%, about 10%. We have about a $120 billion revenue company, so half of that pretty large company is one of the fastest growing, probably S&P 100 companies out there, with a revenue growth of 10%.
And the other half of the company is obviously not, when our revenue in the first half is around 1%-2% growth. So what's going on there? As you unpack that, in the half that's going backwards, it's a lot of the video that you just asked in your first question. And a lot of that video we're a pass-through, if you will, for the programmer-consumer relationship, and the margin, therefore, has really come down to a very, very low margin. Some of the businesses require some cost realignment because the business is contracting, and we're very aggressively doing that. The other half of the company, the growing half of the company, is broken into these six growing businesses, and if we don't get to touch them all, let me just list them.
It starts with broadband, and we can go into consumer broadband, but that business, we have 32 million customers. We have great hopes for what that will be in the next 10 years. It's very appropriate to be here in San Francisco and Silicon Valley on whether you believe innovation is done where we're coming into maybe a hyper mode of continued innovation, and we're on the side of innovation by having the best network. So broadband, we can talk about it, more competitive market because it's such a good market, but if you have the absolute best product, you're gonna win. Second, wireless, another form of broadband, and we're only scratching the surface in wireless. Then you get to business such as business services. We reported that we have a 60% margin on that business, and that's the growing part of the company.
Much better margin than the whole company at large. That, of course, is because you're not involved in the programming business, and we continue to invest there. We have streaming. Streaming revenues just in a couple years of creating Peacock are $3 billion. We can talk about Peacock, but I'm really optimistic on what the business plan we have for Peacock. Theme parks are all over the world, rebounding and surging with consumer appetite and interest and the quality of our parks and what we're building and what we've built. And then premium content that we create out of our studios. Universal Television and Universal Pictures, I would love to brag on a little bit this year.
With all the disruption in movie theaters and what's happening, whether it's Oppenheimer or Super Mario or Fast, we have three of the top five movies of the year. Donna Langley has just taken on more responsibility with all content for the company and, the team, and Mike Cavanagh and I were just in L.A. yesterday, reviewing all the work and obviously disruption from the strikes. But we have a great roadmap ahead. Very excited about that business as well. So you put that together with a strong balance sheet, returning capital to shareholders, and you're able to create a model that, with modest revenue growth, if you take the time to unpack it and you project five years from now, if this half grows at 10 and this half contracts at eight or nine, what does it look like?
Well, you know, the vast majority will be the growing part of the company, and we will have reinvented ourselves with a constant CapEx-type model of knowable investments with a 2.4x levered company. The free cash flow per share, when you go all the way through the system, will be the fastest-growing metric in our company and hopefully very sustainable for years ahead. That is both my comfort and excitement about where we're at.
All right, well, let's dig into some of those growth areas. We can start with your broadband business. You've had a pretty consistent approach to that market in terms of balancing rate and units. Most recently, we've seen rate be a real driver of the business. Your domestic broadband ARPU growth actually was accelerating through the first half of the year, even as the subscriber base remained pretty flat, which is how you'd kind of provided the outlook for that business. Sort of a two-part question here: How confident are you that you can still grow EBITDA and free cash flow in an environment, in that business, where you're not growing subscribers?
And then the second part of it is the confidence that the investments that you're making in your network is something you'll be able to monetize in that kind of a backdrop.
Well, that's a... First of all, let me reconfirm that, the - I see the world very similar to what you said. Let me just put a little clarification around it. You know, even through this third quarter, you know, basically flat is what we are expecting to happen in subscribers. And that has been the case, as you said, for the last several quarters. So in the first half, we, ARPU grew 4.5%. Our historical range has been 3%-4%, and I think what we've tried to say to investors is probably it'll be more into that range. But we're in a competitive business, and I think our team is competing really well. You'll hear from other people this week, newer technologies, new competitors, new investments being made. Why is all that?
Because it's a great business. Is it going to change that? I don't think so. We do broadband in residential and, as I said, in businesses. But then let's zoom out a bit and talk about what's going on with the usage of broadband. And that's where I get very excited about your second part of your question, and why we're making those investments and believe there will be great returns, and will also help differentiate our broadband from our peers and competitors. Just in the last four years, we have 13 times more attached devices to Wi-Fi than we did in 2018, five years. And we've got a billion devices attached in our homes. What's that look like in five years? It's constant or exponentially more? That's a good bet that Wi-Fi will power so much.
If you look at our broadband usage, it's almost doubled in the last couple of years with COVID. The average non-video, non-linear video customer uses 700 gigabits a month of data. That's... You know, wireless is, like, 17. Now we start there. Well, Sunday Ticket is about to launch, and it's 100% streaming. Millions of people are going to stream all those games. Then you roll into, for us, Big Ten coming to Peacock, and then Sunday Night Football, and then an NFL playoff game in January. First game ever, only available on streaming.
Then you look at what's being discussed in that first question about where is ESPN going, and Bob has been pretty clear about someday we're gonna stream ESPN, and the regional sports networks, and we're at 4K, but then there's ultra high def, and is there an 8K and 100K someday? And what does all that need? That needs bandwidth, and it does not need freezing with the ball in the air. So I think as people become more and more user-dependent on the dream of broadband and the capabilities, I think broadband will reinvent itself. And that's before we even get to things like AI, creating more volume through the system, or things like, you know, augmented reality or healthcare in the home, or more Zoom or more video cameras or more video gaming, more YouTube.
So I think we're on just a great side of: Would you like to have the best broadband in your house? We're a company that's investing in DOCSIS 4.0, and that is going to get us up to 10 gigabits bidirectional, unprecedented capability. It's anybody's guess whether we need it all, but I think most of us in this room are gonna absolutely want it.
You've been a leader in the fixed broadband market for a long time. You more recently have been talking about clear and strong demand for your converged offers of broadband and mobile. How do you think about convergence? Do you think of convergence as a product strategy or a network strategy? And if it is a network strategy, does that mean you ultimately need to invest in macro mobile infrastructure?
Well, I think it's both. Today it's a product, so we have our broadband fixed and our broadband mobile, thanks to our relationship with Verizon. We have the best value and the best product in mobile, because it's a mix of our Wi-Fi and our broadband. The average, as I said, mobile customer uses around 17 Gb a month. We're vastly lower because there's-- we're 90% Wi-Fi in our mobile customers' home usage is actually the Wi-Fi network. So we have the fastest Wi-Fi, and we have the nation's best coverage in mobile, and we have all that technology. We don't make any trade-offs to take a lower, inferior product to save capital. We have a capital-light model, and we are spinning up the ability to offload to save costs even beyond that for consumers.
We're probably 30%-50% cheaper in mobile. We're only 10% penetrated, so unbelievable upside. The bundle creates value for our consumers to take the very best broadband, so the story really resonates. And we're spinning up a market. Our tests are going well of offload. We're spinning up officially Philadelphia as our first trial market for a very modest amount of capital. And we've got the great realization that 3% of our geography gets 60% of the bits in our network consumption. So if this works, we're gonna continue to be able to look at more markets, and I think we're in a really good space.
I want to talk a little bit about your business services segment before we move on and start talking about your content and experiences business. It's a $9 billion annualized revenue business. It's returned to mid-single digit growth. As you pointed out, it has some of the highest margins we've seen in any connectivity business in the U.S., right around 60%. How are you thinking about the long-term growth opportunity in this segment? And is it an area where you might be thinking about stepping up your investment in fiber or some other type of infrastructure?
If it was a standalone company with $9 billion-$10 billion and a 60% margin and growing high single digits, there'd be a pretty robust value placed on that company. So we are very committed to wanting to invest behind that growth. We have a great management team, great culture. They've built this organically from zero. It's probably the most successful new build product I've seen. I guess broadband was better, but this is pretty great. And we see a lot of... We've, you know, reached a certain level in the small businesses, but medium and enterprise customers and international customers, we've made an acquisition with Masergy that has been integrated extremely well, and the team's really excited about the capability extension. And I think that's probably what you'd be looking for us, is can we add capabilities?
Can we add scale and growth to our story? Mostly we do that organically, but from time to time, we find some way to invest. Clearly, we're investing in fiber. And, I have nothing to say, but we're really hopeful that that business will help power our growth for years to come.
Do you see an opportunity to start moving more outside your traditional footprint with infrastructure?
I don't know about with exactly with infrastructure, but we got a great relationship with the other cable operators and with AT&T and network operators. It works for data centers and redundancy and for private networks, and the sophistication and everything we just talked about broadband and what it means to your business, what's it gonna mean to computing speeds and all the innovation coming powered by this next generation of computer-driven AI to companies wanting to communicate quickly? We're the solutions company, and I think you'll be hearing a lot about Comcast Business for years to come.
All right. Well, let's turn to the, the content and experiences business. I'd like to start with Hulu. Your put option is coming up in January. Is it currently your intent to exercise your option to sell your 1/3 stake in Hulu to Disney? And, you know, what would be alternative that could be attractive? And if you do sell it, how do we think about reallocating those proceeds?
So we have a little bit of news this morning, which is that we and Disney last week signed a modification to our agreement to bring forward the date that that question begins to get answered to September thirtieth. So as of September thirtieth, after some short period of time, Disney can call, we can put... And I believe that's what will end up happening. So therefore, we thought with all the questions people have had about it, how exactly does that work? Let me just take a few moments and try to be a little bit more specific. Let's start with, as people know or may know, we own a third of Hulu. Hulu is a great business. It's clearly in the United States, the most important market.
It's the number two AVOD, SVOD service behind Netflix. The number one company has a $200 billion valuation in the market today. In terms of the engagement of customers, I think Netflix and Hulu are in a class by themselves. Based on Nielsen, there's two-three times the engagement for Hulu than any other streaming service, save for Netflix. So the contract language, we believe is very clear. And what happens is, you go through an appraisal process, ultimately yielding a value that then we would sell our 1/3 stake. That appraisal process, however, is what I just want to clarify a little bit this morning, we've never been through one at Comcast that I can recall, all my time, because it's a very unusual clause.
It assumes for the appraiser, as if Hulu were to be sold as is, what is that value to maximize the equity value? So the key words or the key concept is as-is business. And you would achieve that through some hypothetical auction or sale process to get that maximization. That could be a sealed bid. It includes Comcast as a bidder. Hypothetically, Disney is a bidder or any other company, tech company, and the like, as a bidder. What you're actually appraising, therefore, and this is really the point, is more than Hulu. A lot more than Hulu, in my opinion, because you start with Hulu as a standalone has a value. Very successful, you know, the numbers are mostly private, so we'll leave that up to the appraisal process.
Second, it's just no one's ever sold a pure play or auctioned off a pure play streaming asset, that's in this kind of position. That's a scarce kingmaker asset, whoever would get that. But the key in why that is so more than Hulu is you get all the content, and you get all the bundling, and you have your own synergy as a buyer. So let's unpack that. The, you know, the content comes from many sources for Hulu. A lot of those are made by Disney-owned entities. And so in this hypothetical sale, which they probably would never actually sell it with all of the content, not just for a year, but just as is. So there's no end date that we think that changes that.
The value of the bundle, you know, we've seen, Hulu with package with Disney and with ESPN+, you'd be able to stay in that bundle. That reduces churn like half for Disney and others. So that value goes with it. And we've seen analyst reports that a buyer, depending on who they were, if it was to scale them up, they could have $2 billion, or who knows what, of synergy. Just that, that piece of the synergy and the churn benefit could be worth $30 billion. And that's before you ascribe any value to the actual Hulu.
Of course, when you go into one of these really robust auctions, and I think if you were selling all of this as is, there'd be a line of bidders around the block to actually buy all the content, all the bundling of Hulu. You know, that business we've never seen. So usually, buyers in robust auctions pay for, you know, the seller gets all the benefits of the synergy, and that's just what Goldman Sachs is really good at getting from people to do. So I think, you know, we are excited to get this resolved. You know, the minimum number of $27.5 billion that people have bandied about, that was just a hypothetical that we picked five years ago because Disney had control of the company. The company is way more valuable today than it was then.
We are, you know, looking forward to seeing how that process... And again, the details are they have an appraiser, we have an appraiser. They're so far apart, then you get a third appraiser. And so it will take a little time for this to play out, but both companies wanted to get it behind us, so we pulled the date forward, started the process therefore, September thirtieth.
Is there a prescribed timeline for this? You said it might take a while. Do we know when it would need to be resolved by?
I think it starts 30 days. After that, you begin to get the first put call triggered and, you know, but they're both companies, I think, are well served to have clarity for our investors, what this really means. You know, you might say: What are we gonna do with the proceeds of this? Let me just say on that, we've been asked that a lot as well. Our plan is to return it to shareholders. Net of bond financing and taxes, we're gonna accomplish a portion of that this year in 2023.
We've increased the run rate by several billion dollars for the remaining two quarters of the year, which really is a reflection of our confidence in the anticipated outcome and of the valuation process and the strength of our underlying business that we've been talking about this morning.
So you've increased the run rate of the buyback program specifically? Is that what's gonna be higher through the balance of the year?
Yes.
And have you outlined how much higher that run rate's gonna be?
Several billion.
Several billion dollars above the current run rate?
Yes.
Okay. That's great-
That's just this year. There'll be more next year 'cause we believe there will be, you know, we'll know exactly how much this use of proceeds will be.
It does sound like the buyback specifically is the part of the capital return program you're gonna augment with the additional proceeds, as opposed to the normal dividend trajectory.
Yes.
Okay. We only have a little bit of time left, and we have so much more to talk about, so let's jump ahead, and I'd like to talk about your studios business for a little bit. You've highlighted premium content creation through your studios division as a real driver of growth for the company. How are you thinking about your content investments longer term, whether it's film or television, and or even in putting it into Peacock?
Well, I think, as I said at the beginning, our creative team is off to, you know, has been doing really well the last several years, and this 2023 is the best year, maybe in Universal's history. We'll see how it all ends up. We'll have an ability to continue to make TV shows and films globally distributed. But our strategy for the U.S. is, I think, pretty clear. We have great business. We are the number one consumed eyeball-reaching television company. What do I mean by that? Well, you watch the Today Show, you watch the news, you watch CNBC, you watch any of our content and one of our films, and we reach, we have a reach that is close to 90-100 million each month.
So how do we get that to remain, regardless of what happens to distribution disputes and things of that nature? Our model of Peacock is really a form of a digital form of all of our content. We've seen other industries do this successfully, transition from an analog world to a digital world, try to have the seesaw as close to balanced as possible. Still make more money in the analog world, but it's getting closer. If you look at some companies, that seesaw is way more distorted because consumers are paying a lot, and they can't get as much in this digital world. Peacock at $5-$6 a month, I think is arguably one of the best values for a consumer anywhere.
We hope the cable bundle, of which NBCUniversal is a part of, is also a great value, and with broadband, we can distribute in either mode. I think content creation being, having a culture that is artist-friendly, having a team that has a track record to not just rely on certain key franchises, but continually reinvent themselves every year. That's what the team's been doing. I think content for us, with so many places to sell it, we also don't just put it on Peacock. We have deals with Netflix and Amazon and HBO and all over the world. Universal's content and NBC's content has resonated, and we'll continue to be flexible to find ways to build value, to remain very competitive.
All right. I'm gonna squeeze in one last question here. Your parks business has been incredibly strong over the last 18 months. We've seen some stabilization or normalization in Orlando, but international has just been a great tailwind. In light of all this success, explain why you're so comfortable making the big investment in Epic Universe, and how should we think about that augmenting the growth trajectory over time?
Parks have been just an amazingly, wonderfully, good surprise business since we bought NBCUniversal. Started with Harry Potter, but now we're seeing it with Nintendo. We've seen it with the Jurassic Coaster in Orlando. We've seen it in Osaka and Beijing. It's given the company just a whole new dynamic. Hotels, 90%+ occupied. Been able to get consumer products, include our content brands from all of our creators. Halloween Horror Nights coming, is a huge, huge month in October. So we looked at where, where's the best market in the world? Orlando. We bought land that GE had previously sold. We bought it back. That was a tough call. We're building a magnificent creation. There's 100 vertical structures or something like this, going up simultaneously.
Restaurants and hotels and attractions, and powered by Nintendo, powered by the great franchises that we've got, Harry Potter and the like. And so you're gonna come. We have a water park. I think it makes Universal even more of a destination, get another day or two of stay. The incremental IRR on that is pretty great and opens that we believe in 2025. And I think we've been rewarded with our judgment in getting further and further into parks under the team. Mark Woodbury is a fabulous creative lead for many years and is now the CEO, doing an incredible job, and he's plug for him, speaking at a competitor conference in a couple of weeks. For those that are interested in learning more about our parks, we'll go into a deeper dive there.
All right. Well, that's a great place to end. Brian, you've been coming here for over 30 years. We certainly look forward to having you back.
Hope you will. Thank you.
Thank you.