August 3, 2005
Comcast Profit Rises 64% on Digital TV and Internet Services
By KEN BELSON
NY Times
http://www.nytimes.com/2005/08/03/business/businessspecial3/03comcast.html?pagewanted=print
The Comcast Corporation, the country's largest cable provider, said
yesterday that profits jumped 64 percent in the second quarter, buoyed by
demand for digital television and high-speed Internet services.
The company, which has 21.4 million television subscribers, earned $430
million, or 19 cents a share, in the quarter that ended June 30, compared
with $262 million, or 12 cents a share, in the same period last year.
Comcast is a bellwether for the industry, and like its rivals it has been
trying to sign up more customers for digital television packages that
provide high-definition programming, more channels and access to
video-on-demand.
It added a better-than-expected 284,000 digital television subscribers in
the quarter. As a result, 9.1 million, or 43 percent, of its customers now
have digital services, which typically cost $10 to $15 a month more than
basic cable plans. At the same time, Comcast lost 77,000 basic cable
customers, about twice what analysts had expected.
The country's largest provider of high-speed Internet service with 7.7
million subscribers, Comcast added 297,000 broadband customers, which was
slightly below analysts' forecasts.
Total revenue grew 10.5 percent, to $5.6 billion, in line with expectations
of analysts. The company did not adjust its full-year targets.
Brian L. Roberts, Comcast's chairman, said he expected the company to
continue generating double-digit growth in operating cash flow, free cash
flow and revenue, critical indicators of a cable company's health.
"We believe these kind of results are sustainable" for the next several
years, Mr. Roberts told analysts in a conference call.
The strong report lifted the company's shares 39 cents, or 1.3 percent, to $31.
Revenue from high-speed Internet services jumped 29 percent, and Comcast's
broadband customers spent $43.34 a month on average, a 53-cent increase
from the first quarter this year.
Analysts have been monitoring the number of new Comcast broadband customers
to gauge how heavy discounts on broadband service being offered by the Bell
companies has affected the cable industry. "The pricing environment hasn't
been as destructive as people feared," said Douglas Shapiro, a cable
analyst at Banc of America Securities, speaking of concerns that the Bells'
discounts would force the cable companies to reply in kind. "All the focus
on pricing is a bit misguided."
Comcast, however, has been slow to introduce Internet-based phone service,
which is seen by analysts as the next big opportunity for cable providers,
and crucial in their battle to win customers from the Bell companies.
Digital phone service is profitable because it can generate $40 or so a
month for each customer, but is inexpensive to introduce.
Comcast added 15,000 Internet phone customers, for a total of 22,000, just
a fraction of the more than 400,000 phone customers that Time Warner Cable
and Cablevision each have already acquired. Comcast's late start, analysts
said, is one reason the company's stock has declined 6.9 percent this year.
Still, Comcast, which now provides the digital phone service in Boston,
Chicago, Hartford, Philadelphia and Portland, Ore., expects the number of
subscribers to grow rapidly once the service is introduced in more markets
and the company begins marketing the service aggressively.
The company said it expected 250,000 digital phone subscribers by the end
of the year and about a million new phone customers in 2006.
"We're now in full deployment mode," said Stephen B. Burke, Comcast's chief
operating officer.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
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