Comcast’s Profit Beat Met With Shrug as AT&T Adds to Web Threatsby
Cable company gains 32,000 TV subscribers after year-ago drop
X1 rollout helping take market share and reverse cord-cutting
Comcast Corp. posted third-quarter profit that beat analysts’ estimates and added more video customers than projected, toughing it out even as investors fret over the ever-growing threat of online competition.
Rival AT&T Inc.’s announcement Tuesday of a $35-a-month online TV package with 100 channels or more, coming next month, added to the growing array of low-cost alternatives to traditional cable, putting pressure on Comcast. The biggest U.S. cable company has responded with a new X1 video system that makes it easier to search for movies and TV shows and lets users access their Netflix subscriptions.
That strategy helped Comcast add 32,000 cable-TV customers in the period, trouncing the average 1,666 prediction, and propelled the company to a 92-cent-a-share profit, excluding some items, topping analysts’ estimates by a penny. Investors reacted tepidly, sending shares down 2.5 percent Wednesday to $62.89 at 11:50 a.m. in New York, a sign that Comcast will have to do more to drown out all the cord-cutting talk. Charter, the second-biggest U.S. cable company, dropped 2.8 percent.
Even as Philadelphia-based Comcast’s cable business succeeds at holding onto customers, it’s TV network division is losing subscribers. In an earnings call Wednesday, Comcast executives said its NBC cable networks saw a “slight decline” in subscribers in the quarter, but that was countered by charging other pay-TV providers higher rates to carry those channels, which include USA and MSNBC.
Of particular concern to broadcasters has been a decline in viewership of football games, once considered one of the few types of programming that large audiences still wanted to watch live. NBCUniversal CEO Steve Burke addressed the drop in NFL ratings this year, saying it was hard to tell why.
In September, viewership of the league’s prime-time games dropped 14 percent from a year earlier among the 18-to-49-year-old demographic coveted by advertisers. Only 1 percent to 2 percent of fans watch NFL games online, he said, so streaming hasn’t eaten into TV viewership. People were spending more time doing other things online and some matchups were better than others, Burke said.
NBC’s ratings for the Olympics in August were also down from 2012, and analysts have questioned whether live sports may not be the panacea to the pay-TV industry that many once thought. Burke said he wasn’t worried about it.
“Obviously you’d rather have ratings up then down but having ratings decline modestly and still very, very very strong properties doesn’t cause us too much concern,” Burke said.
Comcast also signed up 330,000 high-speed internet customers, its best third-quarter in seven years, topping analysts’ predictions of about 312,500.
The film unit generated $1.79 billion in sales during the quarter, down 7.9 percent from a year earlier, a tough comparison because Universal’s blockbuster movie “Jurassic World” was in theaters at the time. In April, Comcast, the parent of Universal Pictures, agreed to buy DreamWorks Animation SKG Inc. for $3.8 billion.
- Revenue rose 14 percent to $21.3 billion in the quarter, the company said in a statement. That topped analysts’ estimates of $21.2 billion.
- Net income for the quarter was $2.24 billion, up 12 percent from a year earlier. The average monthly customer bill climbed 3.6 percent to $148.47.
- Sales in the business services division, which sells phone, web and video services to companies, rose 16 percent to $1.4 billion.
- Revenue at the NBCUniversal group, which includes the NBC broadcast network, cable channels such as USA and MSNBC, the Universal film studio and theme parks, grew 5.7 percent to $7.56 billion excluding the Rio Olympics. Including the Olympics, sales jumped 28 percent to $9.18 billion.
- Total cable network sales excluding the Olympics gained 4.1 percent. Including the games, they climbed 22 percent.
- The cable operator paid $663 million in dividends in the quarter, a 6.5 percent increase from the year-earlier period, and bought back $1.38 billion in stock.