Cable Operators

Comcast, Cablevision Roar in Q1

5/09/2011 12:01 AM Eastern

The cable business continued to roar last
week, as top MSO Comcast reported some of its best
quarterly subscriber results in nearly half a decade, and
Cablevision Systems showed the industry just how powerful
a good acquisition can be.

Comcast surprised analysts
with stronger-than-expected
performance on several
subscriber fronts. It lost just
39,000 basic-video customers
in the period, the lowest since
the first quarter of 2007, and
high-speed Internet additions,
at 418,000 in the quarter, were
above industry trends.

On an analyst conference
call Wednesday, Comcast
Cable Communications
president Neil Smit said the
reason for the improved performance
was simple: better products, better service and
better marketing.

Smit pointed to efforts to drive innovation with the release
of at least one new product per quarter, strides made on the
customer-service front to reduce the total number of service
calls, and marketing programs like the “Endless Fun” campaign,
which Smit said helped spur a double-digit increase in
customers’ intent to purchase in the first quarter.

‘TARGETING OUR MARKETING’

“Our service calls were down, our repeats were down, and
that’s taking some unnecessary noise out of the system,”
Smit said of the customer-service efforts. “We’re targeting
our marketing better. What really drove the total numbers
was more retention than it was gross additions.”

Smit was also encouraged by the strong showing on the
high-speed data front — the 418,000 additions represented
its largest figure since first-quarter 2008 and beat consensus
estimates by almost 30%.

Comcast’s eff orts to target digital-subscriber-line customers
and higher-speed tiers — its 50-Megabit-per-second
service is available in about 90% of homes and its new
105-Mbps tier is available to about 40 million homes — are
paying off , Smit said.

At its NBC Universal programming arm, revenue was
driven by strong performance at the cable networks (up
13.3% to $2 billion in the period), off set by a 35% decline in
broadcast-television revenue and unfavorable comparisons.
Total revenue at NBCU was down 11.5% in the quarter to $4.3
billion, compared to $4.9 billion in 2010. However, 2010 included
$782 million in revenue from the Vancouver Olympic
Games. Excluding the impact of the Olympics, revenue was
up 5.2% at NBCU. Pro forma operating cash flow at the programming
unit was up 4.9%
to $473 million in the period.
NBCU CEO Steve Burke
said the broadcast turnaround
could take a few
years, adding that the programming
giant intends to
spend about $200 million on
new broadcast shows in 2011
and another $100 million on
cable during the year.

BRESNAN BENEFITS

At Cablevision, consolidated
revenue grew nearly 10%,
to $1.922 billion, and adjusted operating cash flow climbed
8.3% to $661.1 million, mainly because of the inclusion of its
most recent acquisition, Bresnan Communications. Without
the Bresnan results, Cablevision said revenue would
have risen about 3.1% and adjusted operating cash fl ow
(AOCF) would have grown 3.7% in the period.

Cablevision purchased Bresnan, which has about
300,000 customers in Utah, Colorado, Montana and Wyoming,
for $1.365 billion in December 2010.

Cable operations performed even better. Telecommunications
revenue, which includes cable and its Optimum
Lightpath commercial-telecom business, reported revenue
of $1.6 billion (up 10.9%) and AOCF of $621.1 million
(up 10%). Cablevision also lost 8,000 basic-video customers
in the period, but added 32,000 high-speed data customers
and 40,000 telephone lines.

Elsewhere, at Charter Communications, which reported
earnings May 3, basic-video losses were steady at 25,100
in the period (compared to 23,400 in 2010).

Revenue rose 3.1% and cash flow was up 4.7%, primarily
on a big jump in commercial-services revenue — up 17.1%
in the period, to $137 million.

Revenue and cash flow at Suddenlink Communications
each rose more than 8% in the quarter, with strong growth
in high-speed data and telephony. Suddenlink, which has
about 1.3 million subscribers in six states, said it added a
total of 80,200 revenue-generating units in the quarter .

June