Comcast Gains Profit, Loses Video Subs28 Apr, 2010 By: Erik Gruenwedel
Resurging advertising sales as well as increases in voice and web customers contributed to Comcast Corp. April 28 reporting first-quarter (ended March 31) net income of $866 million, up 12% from net income of $772 million during the same period a year ago.
The nation’s No. 1 cable operator, which is in the process of acquiring majority ownership of NBC Universal for $30 billion, continued to shed basic video customers, dropping 82,000 subscribers (2.6%) compared with the same period last year.
The decline is significant considering Comcast is moving to become a major creator and aggregator of movies and TV programming – much of it through transactional video-on-demand (VOD).
Comcast is a major player in studios' efforts to create a higher-margin ("virtual video store") VOD market, compared with the margins on DVD/Blu-ray Disc rentals.
Analysts contend cable operators are losing video customers to increased offerings by satellite operators and nascent Telco services such as Verizon’s FiOS TV.
When asked in a call with investors whether the decline in video subscribers indicated a monthly price threshold consumers were not willing to bare, CEO Brian Roberts said bundling of voice, Internet and video into so-called “triple play” packages has been helpful to people worried about their paycheck.
“If you take the cost of your video subscription and divide it by 30 days, it’s pretty affordable entertainment,” Roberts said. “There may be some stratification going on, but net for Comcast we grew our revenue per customer 6%. That’s a pretty great number.”
Indeed, Comcast added 399,000 high-speed Internet customers (up 7%) and 273,000 digital voice subscribers, up nearly 17%, in the period, driving average monthly revenue (bill) per video customer up 6.3% to $122.98.
The company said it spent $14 million in the period on the NBC Universal transaction, which is undergoing regulatory approvals process.
In a positive sign for the slumping advertising market, Comcast said ad sales for its E! Entertainment Television, Style Network, Versus and Golf Channel, among other properties, increased nearly 26% to $360 million.
Overall revenue increased 3.8% to $9.2 billion, compared with $8.9 billion last year.