Modest Q4 For Comcast
Basic Subs Down 199K, Digital, High-Speed Data Beat Estimates
Mike Farrell -- Multichannel News, 2/3/2010 1:33:25 PM
Comcast reported fourth-quarter results in line with expectations, shedding almost 200,000 basic subscribers in the period as revenue rose 2.9% to $9.1 billion and operating cash follow increased 1.1% to $3.4 billion.
Comcast ended the year with 23.6 million video subscribers, down 199,000 from the previous quarter. For the year, consolidated revenue rose 3.9% to $35.8 billion and operating cash flow increased 4.4% to $9.1 billion.
In a conference call with analysts, chief operating officer Steve Burke said that despite nearly 200,000 lost video customers in the period, it could have been worse. Burke said that the company decided to change course in the second half of the year, focusing more on unit growth.
Burke said Comcast concentrated more in the triple play and tempering rate increases in the second half, which translated into higher RGUs. In the second half, Comcast added 895,000 RGUs versus 633,000 in the first half of the year. That was driven primarily by stronger high-speed data additions, including 247,000 new HSD customers in the fourth quarter. Digital video customers rose by 410,000 in the period and telephony subscribers were up by 243,000 in the period.
"The good news is this mid-course correction worked," Burke said on the call, adding that high-speed data additions beat expectations (analyst consensus was for 225,000 high-speed additions).
Burke added that Comcast also had fewer rate increases in the second half of 2009 - about 6.8 million customers saw their monthly bills rise in the fourth quarter of 2009, versus 16.2 million in the same period in 2008.
"The good news is that we got the units, which proves that we can go after market share by getting more aggressive," Burke said.
For 2010, that customer focus will continue, with added emphasis on new products - it will continue to expand its High-Speed 2go wireless broadband product, currently in five markets, to additional areas of the country in 2010; and its DOCSIS 3.0 rollout, now available in 75% of its footprint, will cover the entire customer base early in 2010. Roberts also unveiled a new brand for Comcast products - XFinity - which he said is "a new brand that encompasses our robust technology platform, expanded services we are offering today and the future services we are planning to deliver."
Beginning next week XFinity will be introduced in 11 markets, will expand to half of Comcast's footprint in the next few months and to the majority of its markets by the end of this year.
"The important message to our customers is that Comcast is innovating in all our products across many platforms, giving these customers even more choice and control over the entertainment, communications and information they want," Roberts said.
Cable segment revenue rose 2.6% to $8.6 billion and operating cash flow was up 1.7% to $3.5 billion. For the year revenue increased 3.8% to $33.9 billion and operating cash flow was up 4% to $13.2 billion.
The company's programming segment, which will get a big boost by the end of the year when its joint venture with NBC Universal is expected to pass regulatory muster, disappointed, however. Revenue rose 5.2% in the quarter to $368 million, but operating cash flow declined 17% to $46 million, mainly due to increased marketing costs associated with the launch of several new shows. For the year, programming revenue rose 4.9% to $1.5 billion and operating cash flow increased 7.5% to $389 million.
In a research note, Sanford Bernstein cable analyst Craig Moffett wrote that while cable operations did not surprise, he was modestly disappointed that programming fell short of estimates.
"Welcome to the content business, Comcast," Moffett wrote. "Ain't it a drag?"
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