Comcast Beats Estimates After Adding More Video Customersby
Earnings of 84 cents a share top analysts' projections
Cable operator lures 53,000 video subscribers in first quarter
Comcast Corp., the largest U.S. cable provider, had its biggest first-quarter increase in video subscribers in nine years, continuing to defy the trend of cord-cutting by luring users from rivals like AT&T Inc.
The Philadelphia-based company gained 53,000 cable-TV customers in the quarter. Three analysts surveyed by Bloomberg had projected an average gain of 34,000. Profit excluding some items was 84 cents a share, beating analysts’ projections of 79 cents a share.
Comcast, the parent of Universal Pictures, is in talks to acquire DreamWorks
Animation SKG Inc. for more than $3 billion, the Wall Street Journal reported Tuesday, citing people familiar with the discussions. Though a deal may not be reached, an agreement would probably lead to Comcast merging Universal with DreamWorks Animation, the newspaper said Tuesday, citing the people.
Jason Armstrong, Comcast’s senior vice president for investor relations, started the earnings call Wednesday by saying the company wouldn’t comment on “recent rumors or speculation about any M&A transaction.”
Comcast’s first-quarter results show that competition from online video services like Netflix Inc. isn’t affecting all pay-TV providers equally. Comcast is staving off the decline of the pay-TV business by rolling out its new X1 video platform, adding more on-demand programming, and trying to improve its customer service. The cable company’s gain was AT&T’s loss, with the phone carrier reporting a decline of 54,000 video subscribers last quarter.
While Comcast’s video business is growing, its cable networks are losing some subscribers. NBC’s cable channels have seen “a slight decline in subscribers” that has been offset by rate increases from pay-TV providers, Chief Financial Officer Michael Cavanagh said during the call. NBC’s cable networks such as CNBC and Bravo get paid based on how many people subscribe to them through cable or satellite packages.
“Some of it is shaving and some of its cutting,” said NBCUniversal CEO Steve Burke, referring to consumers signing up for slimmer TV packages or canceling entirely. “It’s not going to grow the way it did 10 years ago but it’s still a good business for us.”
The TV-advertising market was stronger than last year, Burke said, adding that he expects NBC to reach a programming deal with Dish Network Corp. “in the not-too-distant future.” The two companies have been negotiating for weeks over a carriage renewal.
Subscribers also flocked to Comcast’s Internet service in the first quarter, with 438,000 customer signups in the period, topping analysts’ projections for 392,000.
The shares were little changed at $60.85 at 10:51 a.m. in New York. The stock had gained 8.2 percent through Tuesday’s close.
- Revenue rose 5.3 percent to $18.8 billion in the quarter, exceeding analysts’ estimates of $18.6 billion
- The average monthly customer bill climbed 4 percent to $146.15.
- Sales in the business services division, which sells phone, Web and video services to companies, jumped 18 percent to $1.31 billion.
- Sales at the NBCUniversal group, which includes the NBC broadcast network, cable channels such as USA and MSNBC, the Universal film studio and theme parks, rose 3.9 percent to $6.86 billion.
- Advertising revenue at the cable networks was flat at $851 million, while total cable network revenue gained 4 percent. Broadcast network ad revenue was down 17 percent from the prior year, when NBC aired the Super Bowl.
- The cable operator paid $611 million in dividends in the first quarter, a 7 percent increase from the year before, and bought back $1.25 billion in stock.
- The film unit generated $1.38 billion in sales during the quarter, down 4.3 percent from a year earlier, when “Fifty Shades of Grey” helped boost results.