CMCSA Comcast Corporation

By Shalini Ramachandran 

Comcast Corp. reported better-than-expected financial results and added video customers again in the first quarter, extending a strong streak for the cable industry in a weak overall pay-TV market.

Comcast Chief Executive Brian Roberts said the company's addition of net video subscribers over the past 12 months is "an important milestone that has eluded us for nearly a decade."

Speaking on the company's earnings conference call Wednesday, Mr. Roberts and other Comcast executives attributed the growth to reduced customer cancellations, known as churn, thanks to better video products like its X1 set-top box and voice-enabled remote, as well as heightened investment in customer service. Nearly 35% of Comcast's video base now has X1 boxes, the company said.

Comcast added 53,000 video customers, compared with a loss of 8,000 in the prior-year quarter. Its quarterly profit rose to $2.13 billion, or 87 cents a share, up from $2.06 billion, or 81 cents a share, a year ago.

Excluding certain gains and costs, adjusted profit per share for the latest quarter was 84 cents. Revenue grew 5.3% to $18.79 billion. Both figures exceeded estimates from analysts, who were projecting adjusted earnings of 79 cents a share on $18.6 billion in revenue, according to Thomson Reuters.

Since its Time Warner Cable Inc. deal fell apart last year amid regulatory opposition, Comcast has been on the lookout for new deals, investing in digital media companies and theme parks. The company is now in talks to buy DreamWorks Animation SKG Inc. for more than $3 billion, The Wall Street Journal reported late Tuesday. Adding the animation studio to its arsenal could help Comcast become a more formidable rival to Walt Disney Co. in family entertainment and allow it to use DreamWorks franchises like "Shrek" and "Kung Fu Panda" to build out its consumer products and theme parks businesses, which Wall Street is beginning to view as a key growth driver.

"Theme Parks must now be viewed as a foundational element of the Comcast story, and no doubt is a big part of their interest in DreamWorks," MoffettNathanson analyst Craig Moffett wrote in a research note Wednesday. Revenue at the theme parks segment grew 58% to $1 billion in the first quarter, thanks to the inclusion of Universal Studios Japan, which Comcast bought control of last September.

On the call, Comcast executives declined to comment on the deal reports. But NBCUniversal Chief Executive Steve Burke emphasized the value of the film studio's movie franchises, which include animated hits like "Minions."

"We are doing everything we can to make sure that the franchises we have are as strong as possible," he said. Mr. Burke said that during the film group's five-year plan review meeting Tuesday "we spent half the time talking about how to take care of franchises, make sure that they stay fresh, create new ones, [and] make sure they are fully monetized in consumer products and around the world."

Class A shares of Comcast, up 13% over the past three months, were flat at $61.05 in late morning trading. DreamWorks Animation shares increased 14% to $31.

Comcast's results add to the cable industry's comeback after years of losing video subscribers to satellite and phone companies. 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 consumers.

Comcast has been among cable companies in recent quarters to bolster its cable-TV customers even as the overall pay TV industry continues to experience "cord-cutting" and "cord-shaving," when people disconnect their subscriptions or opt for cheaper, skinnier packages.

Comcast's broadband and business services divisions posted strong sales growth in the first quarter, lifting overall revenue at the cable business -- which accounts for the bulk of Comcast's top line -- by 6.7% to $12.2 billion.

Broadband revenue increased 7.6% to $3.3 billion, while voice revenue fell 1.1% to $896 million. Video revenue grew 3.9% to $5.5 billion. Business-services revenue jumped 17.5% to $1.3 billion.

The cable giant added 438,000 broadband customers in the quarter compared with 407,000 a year earlier.

At NBCUniversal, revenue grew 3.9% to $6.9 billion, as its cable networks and theme parks businesses offset revenue declines at filmed entertainment and broadcast TV. Excluding the year-ago boost from the 2015 Super Bowl, NBCU's revenue increased 10.2%. Operating cash flow at NBCU increased 10% to $1.6 billion.

Revenue grew 4% at the unit that includes the company's cable TV networks, and operating cash flow grew 6.4% to $956 million. Higher pay-TV carriage fees from distributors offset a decline in the NBCU cable networks' subscribers, who come from any pay TV provider, not just Comcast's cable service.

Mr. Burke said the decline isn't a "major change" and reiterated that the cable-network business, while still a "good business" is "not going to grow the way it did 10 years ago." Still, Mr. Burke struck an upbeat note looking forward to the Summer Olympics that will be broadcast on NBC, and he predicted a "strong upfront" market, when marketers commit to spending ad dollars on TV ahead of the fall season.

Revenue at the broadcast-TV segment, which includes the flagship NBC network, declined 7.3%. Excluding the impact of the Super Bowl last year, it would have grown 11.4%.

Coming off a blockbuster year, filmed entertainment saw a drop in revenues and operating cash flow because of a decline in home entertainment and theatrical revenues.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

(END) Dow Jones Newswires

April 27, 2016 11:30 ET (15:30 GMT)

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