Comcast Profit Buoyed by Video and Broadband Subscriber Growth
February 03 2016 - 07:40AM
Dow Jones News
Comcast Corp. increased video customers in the fourth quarter,
adding to a surprising comeback for the cable industry in a weak
overall pay-TV market.
The company added 89,000 video customers, compared with 6,000 in
the prior-year quarter. Its quarterly profit grew 2.4% to $1.97
billion, or 79 cents a share, up from $1.93 billion, or 74 cents a
share, last year.
Excluding certain gains and costs, adjusted profit per share for
the latest quarter increased 5.2% to 81 cents, up from 77 cents a
share the year earlier. Revenue grew 8.5% to $19.2 billion.
Analysts were projecting adjusted earnings of 82 cents a share on
$18.8 billion in revenue, according to estimates from Thomson
Reuters.
Comcast's results show the gaining strength of cable operators,
who for years lost video subscribers to satellite and phone
companies but have lately clawed back share. Cable companies are
benefiting from pouring more investment into their cable-TV
products and bundling that alongside fast broadband, as well as
offering cheaper, slimmed-down bundles of programming for more
cost-conscious, younger consumers.
Wall Street analysts say Comcast in particular is beginning to
benefit from the aggressive rollout of its souped-up X1
Internet-connected set-top box and guide, which it has said
increases customers' time spent TV-watching and makes them more
likely to stick with Comcast. The cable operator also last year
budgeted more than $300 million to turning around its customer
service operation, including building an Uber-like app to allow
customers to track and rate their technicians, after some
embarrassing episodes of poor customer interactions went viral.
"I give them two to three years, and I think that the difference
in what they do in customer service can dramatically tick up their
video subscribers," said Jessica Reif Cohen, analyst at Bank of
America Merrill Lynch.
Still, overall, the pay-TV industry continues to experience
"cord-cutting" and "cord-shaving," as people disconnect their
subscriptions and opt for cheaper, skinnier packages.
MoffettNathanson analyst Craig Moffett estimated in a research note
last month that the industry was contracting at a rate of 0.9% a
year, despite a "sharp increase in new household formation."
Comcast's broadband and business services divisions posted
strong revenue growth in the fourth quarter, offsetting softness in
the voice and cable advertising units. Video revenue grew 4.4% to
$5.4 billion.
The cable giant added 460,000 broadband customers in the quarter
compared with 375,000 a year earlier. Voice customer additions grew
to 139,000, compared with 123,000.
Broadband revenue increased 9.8% to $3.2 billion, while voice
revenue fell 1.7% to $899 million. Business-services revenue jumped
18.9% to $1.3 billion. Overall, at the cable business, which
accounts for the bulk of the top line at Comcast, revenue rose 5.9%
to $11.98 billion.
At NBCUniversal, revenue grew 13% to $7.5 billion, powered by
growth at the filmed entertainment and theme parks divisions.
Operating cash flow at NBCU increased 8.7% to $1.6 billion.
Excluding certain one-time items like the 2015 Super Bowl and the
acquisition of a majority stake in Universal Studios Japan last
year, NBCU revenue grew 10.5% to $7.3 billion and operating cash
flow grew 4.7% to $1.5 billion.
Revenue grew 3.4% at the unit that includes the company's cable
TV networks, despite ongoing ratings pressures, but operating cash
flow—a measure of profitability—declined 1.9% because of increased
programming expenses from the licensing of Nascar rights. Revenue
at the broadcast-TV segment, which includes the flagship NBC
network, grew 7%, while operating cash flow declined 5.6% to $217
million because of higher expenses.
Filmed entertainment continued to profit from its blockbuster
year, increasing operating cash flow 85% to $143 million. Operating
cash flow at the theme parks segment grew 37% to $452 million,
though it only grew 12% excluding the Universal Studios Japan
deal.
Also on Wednesday, the company said it was boosting its annual
dividend 10% to $1.10 per share. It also increased its share
repurchase program to $10 billion, with $5 billion to be
repurchased this year.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
February 03, 2016 07:25 ET (12:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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