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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