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Broadband Video Fuels Comcast

30 Jul, 2008 By: Erik Gruenwedel

The addition of 320,000 digital video subscribers helped Comcast Corp. July 30 post second quarter (ended June 30) net income of $632 million, up 7.5% from $588 million during the previous-year period.

The Philadelphia-based cable operator lost 138,000 basic cable subscribers, which COO Stephen Burke said was below company projections.

Comcast's video segment includes free on-demand programming, pay-per-view, new release video-on-demand movies (concurrent with DVD release) and high-definition programming.

“We lost slightly fewer video customers than we had expected and kept adding digital subscribers during the quarter,” Burke said during a call with analysts.

He said Comcast had reached 67% household digital penetration and believed all of its markets could be converted by the end of the year.

“We think our digital conversion and the country's broadcast digital transition represent opportunities for us in 2009,” Burke said. “Freeing up analog capacity will also make us more competitive as an HD platform as more people convert to HDTV.”

Comcast believes it will be able to add upwards of 2 million digital subscribers following the federally mandated transition from over-the-air analog to digital broadcasts.

With many of the government subsidized coupons for digital converter boxes thus far not redeemed, Burke said he believes over-the-air consumers will be inclined to convert to digital than deal with the installation of a converter box.

“It's going to be a substantial number of new customers,” he said.

Comcast added 278,000 high-speed Internet customers, which Burke said has resulted in burgeoning growth of streamed video content.

“In some ways that growth trend is faster than other technologies like the [digital video recorder], DVD or even cell phones,” he said.

The COO said the key is broadband, which he said allows for faster connections, delivery of richer media and can be marketed at a premium.

“When you are streaming video, you really want to have fast data connection,” Burke said. “If you're using it everyday for an hour, you're prepared to pay a higher price to get those kinds of speeds.”

Total revenue surged 11.7%, to $8.6 billion, from $7.7 billion a year ago.

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