Comcast Cable Subscriber Losses Slow in Fourth Quarter
NEW YORK – Cable giant Comcast Corp. on Wednesday reported better-than-expected fourth-quarter financials as the company’s revenue rose 7 percent and its basic cable subscriber losses slowed.
The lower subscriber declines may be a sign that economic and other factors rather than cord cutting by consumers getting their TV content online have been driving recent quarters of cable subscriber weakness.
Comcast's revenue and advanced cable service growth offset expenses related to the recent acquisition of a 51 percent stake in entertainment company NBCUniversal, which were a drag on the bottom line.
Comcast shares rose to hit a new 52-week high of $25.36 in Wednesday trading before closing up 4 percent at $25.13.
Comcast lost 135,000 basic cable subscribers in the fourth quarter, compared with 199,000 in the same period a year earlier and 275,000 in the third quarter. The losses also came in below analysts' average prediction of 206,000 decline. For the full year 2010, declines came in at 757,000, compared with 623,000. It ended 2010 with 22.8 million basic cable subscribers.
Comcast CFO Michael Angelakis said the fourth-quarter improvement in customer momentum should signal the end of increased user losses following the digital TV transition in 2009, which made for tough year-ago comparisons and led to service cancellations once contracts offered back then ended last year.
The reduced subscriber losses come as many analysts have predicted that the fourth quarter would turn around two recent quarters of declines in pay TV subscribers, which had raised fears of cord-cutting.
"This is the lowest fourth-quarter video losses in several years, assuaging some of the concerns of over-the-top" and cord cutting," said Collins Stewart analyst Thomas Eagan.
Comcast's quarterly profit of slightly more than $1 billion was up 6.6 percent from $955 million in the same period a year earlier. Revenue rose 7 percent to $9.7 billion amid strong advertising growth and sales of advanced cable services. The latest quarter included a $76 million goodwill impairment charge, among other one-time items. Excluding those and costs related to the NBCUniversal deal, profit amounted to $975 million.
Expenses related to the NBCUniversal transaction amounted to $62 million in the fourth quarter, or $37 million net of tax, and $216 million for the year, or $130 million net of tax, including operating, tax and other expenses. That came on top of $20 million spent by Comcast on the deal in the fourth quarter of 2009.
The earnings report marked the last one before the cable giant starts consolidating NBCUniversal’s results.
Analysts have been hoping for shareholder rewards from Comcast following the NBCUniversal deal. And indeed, the company on Wednesday announced a dividend increase by 19 percent to 45 cents per share a year and an acceleration of stock buybacks - “to underscore our optimism in our new company,” as Comcast chairman and CEO Brian Roberts said.
He also said: “Now that we have completed the NBCUniversal transaction, we are uniquely positioned, with scale in distribution and content, to drive product leadership and innovation even further and to expand the entertainment choices we offer consumers. We have the right strategic mix of assets, strong momentum and many opportunities to build value for our shareholders.”
On a conference call, Roberts spoke of 2011 as "an exciting new beginning for our company" after accelerating financial and customer results in 2010 and the closing of the NBCUniversal deal.
Neil Smit, president of Comcast Cable, on Wednesday reiterated that the company doesn't currently plan to introduce usage-based broadband pricing. Some analysts have seen that as a possible way for cable operators to curb the growth of online video providers, such as Netflix and Hulu.