Comcast reports jump in profits, revenues
Helped by Super Bowl advertising and still-surging demand for Internet services, Comcast Corp.’s first-quarter profits boomed 30 percent to $1.2 billion and revenue rose 22 percent to almost $15 billion. Comcast CEO Brian Roberts said in a conference call that he was “really pleased” and that “cable had another outstanding quarter with real momentum.”
Helped by Super Bowl advertising and still-surging demand for Internet services, Comcast Corp.'s first-quarter profits boomed 30 percent to $1.2 billion and revenue rose 22 percent to almost $15 billion.
Comcast CEO Brian Roberts said in a conference call that he was "really pleased" and that "cable had another outstanding quarter with real momentum."
But analysts seemed jolted by Comcast's 37,000 TV-subscriber losses, seemingly believing that the company could reverse five years of TV subscriber losses. Some had projected a 20,000-subscriber gain. Now a positive quarter isn't likely to happen until late in 2012 because of cable's seasonality. Thousands of college students and Florida "snow birds" cancel cable subscriptions in the current quarter and restart them later in the year. Comcast has a total of 22.3 million TV subscribers in 39 states.
"They missed," said Craig Moffett, senior analyst with Sanford C. Bernstein & Co. L.L.C. "Fortunately for Comcast shareholders, they beat on everything else."
Three analysts with International Strategy & Investment Group L.L.C. — Vijay Jayant, Judah Rifkin and Vikash Harlalka — called the loss a shock in an e-mailed note on earnings. "By most measures, Comcast ... seems to be humming along nicely," they said, noting, however, the company's story on Wall Street on Wednesday morning was about TV subscribers.
Comcast shares, trading near their 52-week high, fell 18 cents to close at $30.42.
Neil Smit, the cable division president, said in the conference call that the company hiked cable rates in 62 percent of Comcast's franchise areas in the first quarter, compared with 34 percent in the year-ago quarter. Rate hikes lead to higher churn as customers cancel service or seek to negotiate lower rates. "It is great to have this rate increase event behind us," Smit said on the call.
Michael Angelakis, chief financial officer and vice chairman, said the market was more competitive as telephone companies expanded their overlap by offering TV and Internet services in about 38 percent of Comcast's cable areas in the first quarter as compared with 36 percent in the year-ago quarter. In the year-ago quarter, Comcast lost 39,000 TV subscribers.
Jeff Alexander, regional spokesman for Comcast, said the cable company began notifying customers in the Philadelphia-area in November of a rate hike. "The average customer bill increased by 1.1 percent beginning with the January 2012 billing cycle because of the impact of higher programming costs and increased operating expenses. These adjustments did not impact the vast majority of our customers because they received services as part of a promotional offer," Alexander said. Rate increases vary by region in the United States.
In other areas of its business in the first quarter, Comcast added 439,000 Internet customers, compared to 418,000 added in the year-ago quarter.
As one measure of its competitive advantages, Comcast added more residential Internet customers than the combined Verizon Communications Inc. and AT&T. Verizon has said it won't expand FiOS Internet into new territories, forcing many of those with Verizon's slower DSL service to switch to Comcast.
Phone — the third service in Comcast's triple play bundle — appears to be waning as a growth engine as Comcast grew by 164,000 new customers, compared with 260,000 in the year-ago quarter.
At its NBCUniversal subsidiary, the yearlong effort to rebuild the entertainment and news conglomerate appears to be paying off. Cable networks, broadcast TV, films and theme parks reported higher revenue. Cable networks and broadcast TV reported lower cash flow because of investments into new shows.
Revenue rose 18 percent at NBCUniversal to $5.5 billion, including $259 million in advertising revenue from the Super Bowl on NBC. Even without the impact of the Super Bowl, Comcast said, revenue in the NBC broadcast-TV division rose 17.8 percent in the quarter, partly because ratings gains from the hit show The Voice helped advertising.
Contact Bob Fernandez at 215-854-5897 or firstname.lastname@example.org.