By Shalini Ramachandran
Comcast Corp. reported higher revenue and earnings in its third
quarter, as cable operations added more video subscribers and the
summer Olympics Games powered strong gains at its NBCUniversal
broadcast unit.
NBCUniversal's latest performance is likely to be tracked
closely given AT&T Inc.'s recent agreement to buy Time Warner
for $85.4 billion -- a deal modeled largely on Comcast's purchase
of NBCUniversal, which married content and distribution.
Comcast Chief Executive Brian Roberts declined to comment on the
AT&T deal on a call with analysts on Wednesday, but said that
he believes "we have a fabulous company" and NBCUniversal has been
a great investment.
Its NBCUniversal unit's revenue jumped 28% over a year earlier
to $9.2 billion on business tied to the Rio de Janeiro Olympics
broadcasts. Excluding the boost from the event, NBCU's revenue
increased 5.7% compared with a year earlier.
Comcast added 32,000 video customers to its cable business,
compared with a loss of 48,000 subscribers in the prior-year
quarter, lengthening a strong streak for the cable industry in a
weak overall pay-TV market.
The Philadelphia-based company's improved results highlight
cable's comeback after years of losing video subscribers to
satellite and phone companies. Cable-TV companies are benefiting
from pouring more investment into their services and bundling those
alongside fast broadband internet, and cheaper, slimmed-down
bundles of programming for more cost-conscious consumers.
Total quarterly profit rose to $2.2 billion, or 92 cents a
share, up from $2 billion, or 80 cents a share, a year ago. Revenue
grew 14% to $21.3 billion, though up 5.5% when excluding the
contribution from the 2016 summer Olympics.
Revenue and profit slightly exceeded estimates from analysts,
who were projecting earnings of 91 cents a share on $21.2 billion
in revenue, according to Thomson Reuters.
Comcast may soon have a new media-and-broadband rival. On
Tuesday, AT&T said its new DirecTV Now nationwide streaming
service will be priced at $35 a month and stream more than 100
channels -- an offer that undercuts similar packages from
traditional operators like Comcast and new entrants like Sony
Corp.'s PlayStation Vue.
NBCUniversal Chief Executive Steve Burke said he doesn't think
such online television services are going to be "material" to
television growth "in the next year or two." He expects new
entrants to sign up a fraction of the 20 million homes that don't
subscribe to pay-TV today.
"I think we all have a healthy degree of skepticism that these
new [over-the-top] entrants are going to create millions and
millions and millions of subscribers any time soon," Mr. Burke
said. "Most people find tremendous value...in their cable and
satellite subscriptions and are not looking to change."
Comcast, so far, has said it is focused on its own cable
footprint and isn't interested in creating a nationwide streaming
service. That strategy has paid off for the company, as it has
managed to grow video customers despite cord-cutting affecting the
broader industry. The cable company has, in part, credited its
next-generation X1 internet-connected set-top box and guide, which
it says increases customers' stickiness with Comcast. The company
said nearly 45% of its customers now have X1 boxes.
The cable giant's broadband and business services divisions
posted strong sales growth in the third quarter, lifting overall
revenue at the cable business, which accounts for the bulk of
Comcast's top line, by 6.9% to $12.6 billion.
It added 330,000 broadband customers in the quarter, compared
with 320,000 a year earlier. Voice customer additions slowed to
2,000 from 17,000 a year earlier, as the company focused on adding
"double-play" cable TV and internet customers in the quarter.
Revenue grew 22% to $2.9 billion at NBCUniversal's cable
networks, though excluding the Olympics it would have grown 4.1%.
Revenue at the broadcast-TV segment, which includes the flagship
NBC network, grew 56.6% to $3 billion. Excluding the impact of the
Olympics, it would have declined 3.6%, largely because of a
content-licensing deal in the year-ago quarter.
It cable networks' advertising revenue shot up almost 16% in the
third quarter. But, excluding the Olympics, advertising growth was
flat because higher ad rates were offset by viewership
declines.
Comcast shares fell 3% to $62.55 in Wednesday trading in New
York.
A major point of debate in the media industry of late has been
falling ratings for National Football League games. On the call,
Mr. Burke said between 1% and 2% of people are watching NFL and
Olympics programming online, which doesn't explain the viewership
falloffs.
"It's very difficult to tell precisely what is happening on any
sporting property...but if you step back, the Olympics and the NFL
are the two highest-rated programs of the year in all of
television," Mr. Burke said. He added that both continue to be
"very profitable relationships" for Comcast.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
October 27, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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