Comcast 3Q profits up 22.4%; cutbacks hinted

Comcast Corp., which is in talks to acquire NBC Universal Inc., said today that profits soared 22.4 percent in the third quarter as it added 736,000 new phone and high-speed Internet customers, its best performance for the year.

The nation's largest cable-TV company lost 132,000 cable-TV customers, which beat consensus analysts' estimate that Comcast would shed 185,000 cable-TV customers.

Comcast is facing more competition for cable-TV viewers as telephone giants Verizon Communications Corp. and AT&T Inc. expand their pay-TV businesses in Comcast's cable franchise areas. The Philadelphia company also battles fast-growing DirecTV, which has about 19 million pay-TV customers.

Comcast's third-quarter revenues rose 3 percent to $8.8 billion over last year's comparable period, slightly below the year-to-date revenue growth of 4.3 percent.

Profits rose to $944 million, compared with $771 million in the year-ago period. Earnings were per share were 33 cents, compared with 26 cents a year ago.

Comcast chief executive Brian Roberts, in a morning conference call, declined to directly address the widely publicized talks between Comcast and General Electric Co. over NBC Universal.

Sources say that GE and Comcast continue to talk and that a deal could be announced within a couple weeks but is still contingent on a decision by French media giant Vivendi on whether to sell its 20 percent share in NBC Universal. GE owns the remaining 80 percent.

Comcast is expected to agree to a deal that would give it the option to purchase 100 percent of NBC Universal, one of the biggest entertainment programmers in the nation, over three to seven years. Comcast could initially own 51 percent of NBC Universal.

Comcast executives say they will not use Comcast stock to purchase NBC Universal, which is valued at $25 billion to $30 billion.

Michael Angelakis, Comcast chief financial officer, noted in the conference call that the company, which employs about 100,000, was evaluating its workforce with the intent of cutting costs and that he expects a severance charge in the fourth quarter. He did not say how many jobs could be eliminated.

Cable advertising recovered from its sharply lower levels earlier in the year, Angelakis said, but still declined about 10 percent when compared with the year-ago third quarter.

The results emphasized the fact that Comcast's core residential cable-TV business is slowing. Some view Comcast's future core business as its high-speed Internet service.

Comcast's new 361,000 high-speed Internet customers were about double the combined new Internet customers for Verizon, AT&T and Qwest, Comcast executives noted.

Craig Moffett, equity analyst with Sanford C. Bernstein & Co. L.L.C., said Comcast's third-quarter performance was "pretty good" and reinforced the notion of cable companies as "defensive stocks" in the recession.

Comcast executive Stephen Burke said the cable giant heavily marketed its "triple play" bundle in the third quarter, leading to new Internet and phone customers.