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Comcast CEO: No Viable Streaming Biz Model Outside of Cable

3 Aug, 2011 By: Erik Gruenwedel

No. 1 cable operator loses 238,000 video subscribers; Universal ups second quarter cash flow

Don’t expect Comcast Corp. to launch a subscription video-on-demand service similar to Netflix and Amazon Prime anytime soon.

Speaking Aug. 3 to analysts, CEO Brian Roberts said Comcast remained focused on delivering content to cable subscribers through various channels, including its TV Everywhere app, Xfinity TV.

Roberts had been asked if Comcast would attempt to offer streaming to non-subscribers or consumers outside of its service areas, which one analyst pegged at 50 million homes.

“I don't think there's yet a business model that we've seen that … [allows us to] make money,” Roberts said of streaming to non-subscribers, adding that attempts to offer free on-demand programming via Fancast.com proved unprofitable. “… I think it's better when you already have a relationship with the customer to add these services on.”

Roberts wouldn’t rule out wholesaling internal platforms to third parties as it has done with a digital media center in Denver.

“We might be able to do that to other distributors in a way that takes some of this investment and lays it off nationally,” he said. “But I think it's better when you already have a relationship with the customer to add these services on.”

Meanwhile, subsidiary Universal Pictures Aug. 3 reported an increase in quarterly cash flow driven by theatrical revenue from Fast Five and Bridesmaids, and partially offset by lower content licensing and home entertainment revenue.

The studio reported pro forma operating cash flow of $27 million, compared with pro forma operating cash flow of $4 million during the previous-year period. Pro forma results are an accounting formula that reflects fiscal results as if Comcast’s acquisition of NBC Universal had occurred Jan. 1, 2010, instead of the actual date Jan. 28, 2011.

Universal Pictures, which includes Universal Studios Home Entertainment, is part of NBC Universal, which is owned by Comcast Corp. Comcast does not report operating income for its separate business units.

Studio revenue increased 21% to more than $1.2 billion, compared with $1 billion last year.

NBC Universal reported quarterly operating cash flow of $1 billion, compared with $952 million last year. Revenue increased 17%, to $5.1 billion from $4.4 billion last year.

Separately, Comcast said it lost 238,000 video subscribers in the quarter, underscoring ongoing challenges cable operators face maintaining subscribers during an ongoing recession and due to comptetition from video sources such as Netflix, Amazon Prime and rental kiosks, among others.

The subscriber loss was an improvement over the same period in 2010 when Comcast shed 265,000 video members. Year-to-date, Comcast has lost 277,000 video subs, compared with losing 347,000 in 2010.

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