Comcast Corp. got its chance to back up its claims of improved cash flow and
margin growth should it get hold of AT&T Broadband, reporting strong results
for the second quarter, even in systems recently acquired from AT&T
Comcast reported revenue growth of 9.7 percent and cash-flow growth of 13
percent in the period for its cable systems. Cash-flow margins in the period
rose 1.2 points to 43.7 percent, more than double AT&T Broadband's
second-quarter margins of 19.5 percent, including restructuring charges.
Digital subscribers rose by 200,000 in the period to 1.8 million and data
customers grew by 101,000 to 675,000.
Those results include about 1.4 million subscribers AT&T Broadband
acquired from Comcast earlier this year.
'We took in systems with lower margins and were able to pull the margins up,'
Comcast president Brian Roberts said in the conference call.
Comcast also upped its guidance for digital and data subscribers for the year
to 2.2 million and 950,000, respectively.
'When you think we're doing that on the heels of the integration of 2 million
customers, it encourages me that we're up to the challenge for AT&T
Broadband and what we've proposed,' Roberts said.
Roberts also reiterated that he believes Comcast's offer for AT&T
Broadband -- now at about $52 billion in stock and debt -- is a fair price.
AT&T Corp. rejected Comcast's bid July 18 as inadequate.
Roberts said reports that Comcast's bid doesn't reflect what AT&T paid
for its cable assets are untrue. He added that AT&T's purchases of
Tele-Communications Inc. and MediaOne Group Inc. worked out to be between $3,400
and $3,500 per subscriber.
'Our offer is north of that,' Roberts said.
Roberts appeared to backtrack a bit on Comcast's earlier stance on cable
telephony. In the past, he has hinted that he would likely scale back AT&T
Broadband's aggressive rollout of cable-telephony service.
'We are committed to the cable-telephony opportunity,' Roberts said. 'We are
sure that we can bring our financial approach and disciplined approach to [the]
rollout of new services to enhancing their existing offerings and find a way to
create value. We think telephony is a big part of cable's future.'
But he admitted that Comcast has scaled back the telephony rollout in systems
in Michigan and Virginia that it acquired from AT&T Broadband.
'We slowed down the rush to get certain penetrations that may be too
aggressive to show short-term cash flow,' Roberts said. 'We're intrigued to
learn more about it.'