Ex-AT&T Systems Boost Comcast


Comcast Corp.’s integration of AT&T Broadband continued at a rapid pace
in the second quarter, with the Philadelphia-based MSO adding 12,100 subscribers
in the period, reversing its loss of 123,000 customers a year ago.

Reversing the downward slide in subscribers at the former AT&T Broadband
systems -- which Comcast acquired in November -- has been watched closely by

The subscriber gain came from the former AT&T Broadband systems, which
added 35,200 customers in the period. The turnaround at those systems also
forced Comcast to raise its guidance for subscriber additions from flat to
125,000 net additions to between 125,000-150,000 net additions for the year.

In a conference call with analysts, Comcast Cable Communications Inc.
president Steve Burke said the losses at the historical Comcast systems -- about
23,100 subscribers -- were due mainly to seasonal disconnects.

Burke said he expected subscriber growth at the historical systems to pick up
in the second half of the year, adding that Comcast’s focus on improving results
at the former AT&T Broadband systems may have affected subscriber growth at
the historical systems.

"On the margin, we have put a lot of energy, effort, management talent,
marketing spending and concentration on the AT&T side," he added. "That may,
on the margin, be affecting basic subscribers. We fully expect to gain basic
subscribers on the Comcast side at a reasonable rate had the AT&T deal not
been done."

Pro forma revenue for the entire company was up 10.2% to $5.7 billion in the
period and pro forma operating cash flow rose 32% to $1.8 billion, fueled by
strong growth in digital-cable and high-speed-data subscribers.

In the cable division, revenue increased 9.2% and operating cash flow was up
36%, including acquisition and employee-termination costs.

As a result, Comcast increased its year-end cable operating-cash-flow
guidance $100 million to between $6.3 billion-$6.4 billion. Operating-cash-flow
margins -- operating cash flow as a percentage of revenue -- were 36.5% in the
quarter compared with 29.4% a year ago.

The margin improvement was most notable in the AT&T Broadband systems --
32.3% in the second quarter, versus 21.2% last year. Comcast historical systems
improved operating-cash-flow margins from 42.3% to 43% in the most recent

"When we first made the proposal for [the AT&T Broadband acquisition], we
were hoping to get there in several years, not in two quarters," Comcast
president Brian Roberts said on the conference call.

Burke also said Comcast was on track to meeting its goal of reducing
programming costs by $270 million for the year.

"In our minds, there is no question that we will meet that goal," he added.
"The question is how much we will exceed it."