Comcast Commands Strong Q3 Results

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Comcast bucked the recent third-quarter trend of sluggish subscriber and financial growth, reporting strong consolidated revenue and cash flow growth, fueled by solid performance at its cable systems and networks.
Consolidated revenue increased 5% to $14.3 billion and operating cash flow rose 3.2% to $4.6 billion, primarily because of strong performance at its cable systems and cable networks.
Cable operations revenue increased 5% to $9.3 billion and operating cash flow up a strong 6.7% to $3.7 billion.
Basic subscriber losses also were lower than expected at 165,000 households, compared to a loss of 275,000 basic video customers in 2010.
High-speed data additions outpaced estimates with 261,000 additions in the period, vs. 249,000 additions in 2010. Phone customer growth, following a trend of its publicly traded peers, was slower than expected at 133,000 subscribers, down from the 228,000 additions last year.
On a conference call with analysts, Comcast chairman and CEO Brian Roberts said the MSO has completed its DOCSIS 3.0 expansion and its all-digital projects, which he claimed was a factor in the strong performance.
Roberts said the completion of those projects has led to faster Internet speeds for customers and more content choices - Comcast has about 30,000 on demand content choices on TV, 200,000 choices online and 20,000 choices on apps. That he said, is translating into stronger subscriber metrics.
"I think cable's results so far this year show that our scale, our Xfinity brand and our intensified focus on service and innovation are coming together to make a difference," Roberts said.
In a research note, Collins Stewart media analyst Tom Eagan said the Comcast results "should help revive sentiment in the sector," which had been reeling in recent days from disappointing showings from Time Warner Cable and Cablevision Systems.
Comcast shares were up 2.6% (59 cents) to $23.57 in early trading Wednesday.
Sanford Bernstein cable and satellite analyst Craig Moffett said the performance should "put to rest the perennial second quarter and third quarter arguments that cable is dead."
"Seasonally, they now get to head into the strongest six months of the year," Moffett added.
But the analyst wasn't as optimistic about the NBC Universal programming arm. While Moffett acknowledged that cable networks had another strong quarter - revenue was up 12% to $2.1 billion and operating cash flow rose 8.5% to $831 million - the face of NBCU, its broadcast unit, continued to lag,. Broadcast revenue increased 2.9% in the period to $1.5 billion but operating cash flow plunged 76% from $70 million in 2010 to $17 million in the current period.
Although investors were braced for continued weakness in broadcast - NBCU CEO Steve Burke has repeatedly said it could take as long as five years to right the network - "they didn't disappoint in disappointing," Moffett wrote.

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