[opendtv] News: Comcast Profit Rises 64% on Digital TV and Internet Services

[Craig Birkmaier <craig@xxxxxxxxx>]

http://www.nytimes.com/2005/08/03/business/businessspecial3/03comcast.html?th&emc=th

Comcast Profit Rises 64% on Digital TV and Internet Services

By KEN BELSON

Published: August 3, 2005

The  Comcast Corporation, the country's largest cable provider, said 
yesterday that profits jumped 64 percent in the second quarter, 
buoyed by demand for digital television and high-speed Internet 
services.

The company, which has 21.4 million television subscribers, earned 
$430 million, or 19 cents a share, in the quarter that ended June 30, 
compared with $262 million, or 12 cents a share, in the same period 
last year.

Comcast is a bellwether for the industry, and like its rivals it has 
been trying to sign up more customers for digital television packages 
that provide high-definition programming, more channels and access to 
video-on-demand.

It added a better-than-expected 284,000 digital television 
subscribers in the quarter. As a result, 9.1 million, or 43 percent, 
of its customers now have digital services, which typically cost $10 
to $15 a month more than basic cable plans. At the same time, Comcast 
lost 77,000 basic cable customers, about twice what analysts had 
expected.

The country's largest provider of high-speed Internet service with 
7.7 million subscribers, Comcast added 297,000 broadband customers, 
which was slightly below analysts' forecasts.

Total revenue grew 10.5 percent, to $5.6 billion, in line with 
expectations of analysts. The company did not adjust its full-year 
targets.

Brian L. Roberts, Comcast's chairman, said he expected the company to 
continue generating double-digit growth in operating cash flow, free 
cash flow and revenue, critical indicators of a cable company's 
health.

"We believe these kind of results are sustainable" for the next 
several years, Mr. Roberts told analysts in a conference call.

The strong report lifted the company's shares 39 cents, or 1.3 percent, to $31.

Revenue from high-speed Internet services jumped 29 percent, and 
Comcast's broadband customers spent $43.34 a month on average, a 
53-cent increase from the first quarter this year.

Analysts have been monitoring the number of new Comcast broadband 
customers to gauge how heavy discounts on broadband service being 
offered by the Bell companies has affected the cable industry. "The 
pricing environment hasn't been as destructive as people feared," 
said Douglas Shapiro, a cable analyst at Banc of America Securities, 
speaking of concerns that the Bells' discounts would force the cable 
companies to reply in kind. "All the focus on pricing is a bit 
misguided."

Comcast, however, has been slow to introduce Internet-based phone 
service, which is seen by analysts as the next big opportunity for 
cable providers, and crucial in their battle to win customers from 
the Bell companies. Digital phone service is profitable because it 
can generate $40 or so a month for each customer, but is inexpensive 
to introduce.

Comcast added 15,000 Internet phone customers, for a total of 22,000, 
just a fraction of the more than 400,000 phone customers that Time 
Warner Cable and Cablevision each have already acquired. Comcast's 
late start, analysts said, is one reason the company's stock has 
declined 6.9 percent this year.

Still, Comcast, which now provides the digital phone service in 
Boston, Chicago, Hartford, Philadelphia and Portland, Ore., expects 
the number of subscribers to grow rapidly once the service is 
introduced in more markets and the company begins marketing the 
service aggressively.

The company said it expected 250,000 digital phone subscribers by the 
end of the year and about a million new phone customers in 2006.

"We're now in full deployment mode," said Stephen B. Burke, Comcast's 
chief operating officer.
 
 
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