At its first analyst day meeting since 1999, Comcast Corp. gave a rare glimpse into its local cable operations, focusing on large markets it has recently acquired as part of its merger with AT&T Broadband.
If there was a theme to this year's meeting, held in the Pierre Hotel here last Friday, it appeared to be that refocusing the former AT&T Broadband systems on selling core video services rather than telephony service saved the day.
Here are a few examples.
Seattle: Midwest division president Brad Dusto said that although the Seattle market had gained subscribers last year under AT&T, it was mainly because of deep discounting. Dusto said that about 25% of customers in Seattle were receiving discounts of between $20 and $30 per month. In addition, customer-retention representatives were extending those discounts and even offering other discount packages to customers who called in threatening to disconnect service.
The first thing Seattle manager Rick Germano did was stop the promotional discounts and hold a meeting with 1,000 retention reps to retrain them about the value of cable. Next, he offered those reps an incentive – they would get $5 for every customer they sold full installation at the full monthly rate.
The result was that average revenue per subscriber rose by $1.15 in the first quarter, which annualized translates into an additional $38 million of revenue per year. When fully complete, Comcast expects to increase revenue by $52 million for the full year.
Dusto said that employees were worried that subscriber counts would fall once the discounts were eliminated, but the reverse happened. Seattle added 8,900 customers in the first quarter and churn was a low 2% per month.
"We found the customers were willing to pay," Dusto said. "There is value in cable."
New England: Eastern division president Mike Doyle said operations here were at the top of AT&T Broadband performance levels, but compared to existing Comcast properties in Pennsylvania and New Jersey, were at the bottom of the list.
Doyle said Comcast quickly restructured the New England market into five separate business units. Comcast, which also installed a strong operations manager, Kevin Casey as regional vice president, accelerated upgrades. (It rebuilt 1,074 miles of plant in the first quarter of 2003 compared to just 9 miles in the same period last year.) The company also introduced new services like HDTV and video-on-demand and switched the focus from selling telephony service to selling video.
The result was a dramatic increase in average revenue per subscriber – from $59.73 per month in the first quarter of 2002 to $69.50 in the first quarter of 2003.
HDTV services, launched in February, also have been successful — Comcast now has 40,000 HDTV subscribers and is adding about 1,500 new customers per week.
Overall basic subscribers saw a dramatic turnaround as well – to an 11,000-subscriber gain in the most recent quarter, compared from a 25,000-subscriber loss in the prior year.
Doyle added that by focusing on video, telephony subscribers also grew. In the first quarter, Comcast added 22,230 telephony customers, compared to 13,801 subscriber additions in the prior year.