Jason S. Armstrong
Chief Financial Officer at Comcast
Thanks, Mike, and good morning, everyone. In late February, we announced that starting this quarter, we will be reporting our results in two reportable business units: Connectivity & Platforms and Content & Experiences. More closely align our like-minded businesses reflect how we run our company and highlight our opportunities for growth as a globally integrated content distribution company. We're also providing more disclosure around areas that have become increasingly important to our overall results, namely business services and Peacock.
Let's start with our consolidated first quarter results on Slide 4. Total company revenue of $29.7 billion declined 4% due to tough comparison to last year's Winter Olympics and Super Bowl as well as the negative impact of foreign currency, while our total company adjusted EBITDA grew 3%, thanks to continued strong operating leverage at our high-margin Connectivity & Platforms business. Excluding the impacts of the Winter Olympics and Super Bowl and adjusting for constant currency, total company revenue increased 1.5%. We grew adjusted earnings per share by 7% to $0.92 and generated $3.8 billion of free cash flow while returning $3.2 billion of capital to shareholders in the first quarter. This is in addition to significant investments to support and grow our businesses, including our transition to DOCSIS 4.0 and footprint expansion in broadband, the construction of Epic as well as consistent flow of new lands and attractions at our theme parks and content production at our studios, which feeds into Peacock, a robust third-party licensing opportunity and a really successful film business. When taken together, these investment areas generated over half of total company revenue in the first quarter with growth of 10% year-over-year.
Now let's turn to our business results. Starting on Slide 5 with Connectivity & Platforms. As a reminder, our largest foreign exchange exposure is the British pound, which was down over 9% year-over-year. So in order to highlight the underlying performance of the business, I'll speak to our results at Connectivity & Platforms on a constant currency basis. Revenue was flat this quarter, but this is worth unpacking. Our core connectivity revenues, residential and business, grew over 7% to $10 billion, while video, advertising and other revenues declined 7% to $9.8 billion. Year-over-year, we generated 160 basis points of margin expansion for Connectivity & Platforms on a total basis. This is reflective of our strategy of investing in and driving growth in high-margin businesses while protecting profitability in businesses with secular headwinds through disciplined cost control.
To get into more detail, residential connectivity revenue grew by 8% with 5% growth in domestic broadband, 27% growth in wireless and 18% growth in international. In business services connectivity, revenue continued to grow at a healthy mid-single-digit pace. Our domestic residential broadband customer base this quarter remained stable over both the last year and in the quarter with churn remaining below pre-pandemic levels. While we had some success towards the end of the quarter with a couple of offers targeting the lower end of the market, the broadband environment remains highly competitive right now, particularly at the lower end. And as such, our view remains that 2023 will be a challenging period for us to add subs. Our outlook for growth and our strategy has been consistent. We will compete aggressively but do so in a financially disciplined way. While we expect to return to growth in broadband subscribers over time, during this interim period as well as over the longer term, we will focus on protecting and growing broadband ARPU. And we're pleased with the 4.5% year-over-year increase in ARPU in the quarter. We expect continued strong revenue growth over the course of 2023 and expect ARPU will be the primary driver.
Growth in domestic wireless revenue was a function of higher service revenue driven by continued strong momentum in customer lines, which are up 1.4 million or 32% year-over-year to 5.7 million in total, including the 355,000 lines we just added, which was a record high for a first quarter. There is clearly demand for a converged offering that delivers reliable and fast speeds, both in and out of the home. We are extremely well positioned to take advantage of this trend and have a long runway for growth as less than 10% of our broadband accounts currently take our mobile offering.
A new disclosure category for us is international connectivity. Roughly 2/3 of international connectivity revenue is broadband, growing at mid-teens levels. The remaining 1/3 is wireless, of which a big portion comes from device sales and therefore, tends to fluctuate with the timing of device launches. The rest of wireless is service revenue, which is growing nicely due to additional customer lines and healthy ARPU growth. The strong revenue growth in our connectivity businesses was offset by declines in video due to customer losses relative to last year, in other revenue reflecting similar dynamics in wireline voice and in advertising which was impacted by a tough macro environment in addition to lower political revenue in our domestic markets.
On the expense side, every expense line item declined in the first quarter with the exception of direct product costs, which are success-based and directly associated with the significant growth in our connectivity businesses. The strong execution by the team to deliver sustainable operating efficiencies, coupled with solid growth in our high-margin connectivity businesses, resulted in Connectivity & Platforms EBITDA growth of 4% to $8.1 billion. And as I mentioned a moment ago, an adjusted margin expanding 160 basis points year-over-year. And that is despite some temporary margin headwinds in our international business associated with some pressure on revenue due to a challenging macro environment and higher programming costs for sports channels, which were up this year given the timing of events.
Margin for our domestic legacy Cable business improved 250 basis points, reaching a record high of 46.5%. We've added disclosure this quarter and going forward to break down profitability between residential and business services. Residential Connectivity & Platforms EBITDA grew 3% with margin improving 140 basis points to reach 37.8%, highlighting favorable revenue mix shifts. Business services connectivity EBITDA grew 8%, with margin expanding 150 basis points to reach 58.3%. Over the years, we've talked about business services as a driver of margin accretive growth, and we're excited to augment our disclosure in this area for the first time. Our results in the quarter and our new reporting structure clearly show that. This is a business that generated over $5 billion of EBITDA in 2022 with substantial growth ahead and should be a material contributor to our growth profile in Connectivity & Platforms and overall. Wrapping up on Connectivity & Platforms, I'm proud of the team successfully navigating a transition in which we're managing businesses that have secular headwinds with an appropriately high level of cost discipline while investing in others that clearly have strong revenue growth and margin characteristics.
Now let's turn to Content & Experiences on Slide 6. Content & Experiences revenue decreased nearly 10%, reflecting the difficult comparison to last year, which included $1.5 billion of revenue from the Winter Olympics and the Super Bowl reported in our Media segment. And EBITDA decreased 1% as a record first quarter at parks and strong studio growth driven by a successful film slate was offset by the planned increase in our Peacock investment as well as lower linear advertising sales. Unpacking these results further, Media revenue decreased 21% on an as-reported basis and 2% when excluding the Olympics and Super Bowl primarily due to a 6% decline in domestic advertising, reflecting softness in the overall ad market, which appears to have stabilized, offset somewhat by strong growth in Peacock advertising revenue. When you exclude Olympics and Super Bowl, Peacock advertising increased an impressive 90%.
Domestic distribution revenue decreased 8% but was up 4% excluding the Olympics driven by Peacock with distribution revenue up 83%. In total, Peacock revenue increased by 45% to $685 million, led by strong growth in paid subscribers, which were up over 60% year-over-year, ending the quarter with nearly 22 million paid subs, which marked another terrific milestone on our path to scaling the service. We're encouraged with the trends we're seeing at Peacock. While we've proven that special content and major events like the World Cup at the end of last year can be significant acquisition drivers, perhaps equally or even more important is sustaining engagement following this type of acquisition content and delivering on retention. We saw that in the first quarter, and we look forward to reporting further momentum in the enhanced disclosures we're now providing for Peacock, including the revenue breakdown between advertising and distribution and costs separated by programming and production versus marketing, promotion and other.
Another new category that we added to our Media disclosure is international networks. This is mainly distribution revenue for Sky Sports, and the low single-digit revenue increase in the quarter was driven by higher distribution revenue, partially offset by the negative impact of foreign currency translation. Other revenue decreased 21% due to lower content licensing. Media EBITDA decreased 26%, including a $704 million EBITDA loss at Peacock. We view Media as one business. And while we have made cost reductions at our linear networks, we reallocated some of these resources to Peacock with the goal of maximizing profitability over the short and long term across streaming and linear. We continue to expect Peacock losses for the year to be around $3 billion, which we believe will be peak losses for Peacock and then begin to steadily improve.
At Studios, this was a great quarter for our film slate with strong theatrical revenue growth driven by the successful carryover from Puss in Boots: The Last Wish, which launched at the end of the fourth quarter, as well as new releases such as M3GAN and Cocaine Bear. While revenue growth was partially offset by lower content licensing at our television studios, the momentum in our film business drove a 13% increase in Studio EBITDA, which also included marketing and promotion expense associated with the April 5 release of Super Mario Bros., which is fueling a strong start to our second quarter.
At Theme Parks, revenue grew 25% and EBITDA 46% to $658 million, thanks to a continued rebound following the lift of COVID restrictions and a testament to the significant investments we've made at our parks. While demand and financial results were strong across the board, our international parks drove most of the growth this quarter. With Japan no longer impacted by COVID restrictions, our park in Osaka continued to rebound. And we are seeing significant demand for Super Nintendo World, which we opened in 2021. Given the COVID-related restrictions that were in place, many people couldn't visit the park. Our park in Beijing was also impacted by COVID-related restrictions last year and is now growing at a very healthy rate. Beijing showed strong year-over-year improvement and was profitable in the quarter despite normal winter seasonal headwinds. On the domestic side, Hollywood enjoyed record first quarter results due to the very successful opening of Super Nintendo World, while Orlando continues to trend above pre-pandemic levels.
I'll now wrap up with free cash flow and capital allocation on Slide 7. As I mentioned previously, we generated $3.8 billion in free cash flow this quarter and achieved this while absorbing a high level of working capital and making meaningful investments in our network and theme parks. These investments drove a 37% increase in total capital spending primarily driven by higher capex. At Connectivity & Platforms, capex increased 30% with capex intensity coming in at 9.7% primarily driven by investments to further strengthen and extend our network. In 2022, capex intensity at Connectivity & Platforms was 10%. And we expect to achieve a similar level in 2023, which is inclusive of the prior guidance we provided for our domestic Cable business at year-end as we continue to transition our U.S. network to DOCSIS 4.0 as well as accelerate our growth in homes passed. Content & Experiences capex increased by $343 million driven by parks with Epic accounting for the majority of this quarter's increase in spend. As we noted on our year-end call, we expect park's capex in 2023 to increase by around $1.2 billion, remain elevated in 2024 and then decrease in 2025, the year we open Epic.
Wrapping up, since this is my first quarter as CFO, let me reiterate our capital allocation framework. First is to invest for growth in our businesses. We've talked through many examples today: Epic, our broadband network, streaming and aggregation to name a few. Second is to protect our balance sheet position with targeted leverage of around 2.4-times. This is an optimal level, we believe, to maintain broad and deep capital markets access through a cycle, balanced prudently with the opportunity for enhanced levered equity returns. Third is to return cash to shareholders. I'm proud that we bought back $12 billion of stock in the last 12 months, including $2 billion this quarter, shrinking our share count by 7% in that time frame in addition to a healthy and growing dividend, which we just increased by over 7% in January. With that, I'll turn the call back to Marci for Q&A. Marci?
