Comcast Revenue Climbs 14%, As Basic Video Subs Drop


While overall revenue grew, Comcast's video business continued to erode in the first three months of 2008, with the No. 1 cable multisystem operator reporting a decline in basic video subscribers of 57,000, or 0.2%, for the period.

Net income in the first quarter of 2008 was down 12.5%, to $732 million ($0.24 per share), compared with $837 million ($0.26 per share) in the prior year. 

However, revenue increased 14% in the first quarter, to $8.4 billion, while operating cash flow increased 15%, to $3.2 billion, and operating income increased 23%, to $1.6 billion. 

In addition, free cash flow rose 59% -- to $702 million in the quarter compared with $442 million in Q1 2007. The company said the increase was due primarily to growth in consolidated operating cash flow along with "relatively unchanged" cable capital expenditures of $1.4 billion.

"We delivered healthy growth in revenues, operating cash flow, free cash flow, adjusted EPS and strong unit additions," Comcast CEO Brian Roberts said in a prepared statement. "Our performance demonstrates that our operating strategy is working in an economic and competitive environment that continues to be challenging."

Roberts added, "We are confident that our outlook for 2008 is achievable and we are on track to deliver on our goal of consistent and profitable growth that builds long term shareholder value."

He also noted that Comcast invested $1 billion to repurchase almost 2% of the company's outstanding shares in the first quarter of 2008, and on April 30 made its first payment on the recently announced quarterly dividend to shareholders.

The increase in first quarter revenue reflected price increases for video services as well as growth for Comcast's high-speed Internet, digital voice and digital cable with advanced services. That was offset by "modestly" lower average revenue per unit on several products because of an increase in customers receiving service as part of a promotional offer or in a new product package, the company said.

Sanford Bernstein senior analyst Craig Moffett, in a note to investors, said the subscriber loss (a reversal of net gains a year ago) was in line with low expectations, and said there was strength to be found in the results.

“For one, overall subscription growth remains very healthy, with little sign of the broader economy's macro-economic weakness. Comcast's broadband growth remains strong, and is clearly gaining share. And its Digital Voice growth is still accelerating. The bundle is working,” Moffett wrote. 

He added that “broadband was the highlight.” Comcast added 492,000 subscribers, up 44% from fourth-quarter gains, “and topped consensus by nearly 50%. As was the pattern with Time Warner Cable yesterday, cable broadband continues to gain share, and at an accelerating pace.”