By Shalini Ramachandran 

Comcast Corp. reported better-than-expected financial results in the third quarter, as the cable company added video customers and the Rio Olympics powered strong growth at its NBCUniversal unit.

NBCUniversal's growth may be tracked particularly 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.

On an earnings call with analysts, Comcast Chief Executive Brian Roberts declined to comment on the AT&T deal, but said that he believes "we have a fabulous company" and NBCUniversal has been a great investment for Comcast.

Revenue grew 28% to $9.2 billion at NBCUniversal in the third quarter, thanks to the Rio Olympics. Excluding the boost from the Games, NBCU's revenue increased 5.7%.

On the cable side, Comcast added 32,000 video customers, compared with a loss of 48,000 in the prior-year quarter, lengthening a strong streak for the cable industry in a weak overall pay-TV market.

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.

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 it was only up 5.5% when excluding the impact of the 2016 Rio 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 CEO Steve Burke said he doesn't think new online television services are going to be "material" to television growth "in the next year or two." He projected that new entrants will likely only 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. The cable company has, in part, credited its next-generation X1 internet-connected set-top box and guide, which it says increases customers' time spent watching TV and makes them more likely to stick 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.

The cable giant 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.

Comcast's 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.

Shares of Comcast fell 2.9% to $62.65 in midafternoon trading.

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 only about 1% to 2% of people are watching NFL and Olympics programming online, which doesn't explain away 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.

Coming off a blockbuster year, filmed entertainment continued to see a drop in revenues and operating cash flow, despite the success of the animated movie "The Secret Life of Pets." Revenue at the theme parks segment, however, grew 61% to $1.4 billion, thanks to the September 2015 purchase of control of Universal Studios Japan and continued strength at the Harry Potter attractions.

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

 

(END) Dow Jones Newswires

October 26, 2016 14:30 ET (18:30 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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