Comcast loves 'Despicable Me'
Burke lauds NBC Uni hit, notes acquisition "on track"NEW YORK - Cable giant Comcast Corp. is excited about recent NBC Universal creative successes, particularly boxoffice hit "Despicable Me." Comcast COO Steve Burke, who would oversee NBC Uni if Comcast's planned acquisition of a 51% stake goes through, on Wednesday lauded the film as an entry into film animation (and therefore "a big deal") and as a potential hit franchise.
Burke in an earnings conference call also said that "there have been mainly positive turnarounds" since the announcement of the NBC Uni transaction. He cited the overall ad market turn, finance market improvements that have made the financing of the acquisition more favorable and recent creative successes at NBC Uni. Beyond "Despicable Me," Burke at that point lauded successes at NBC and cable networks without mentioning specific shows though.
Chairman and CEO Brian Roberts, meanwhile, told analysts, who repeatedly asked whether there could be delays, that the regulatory process for the NBC Uni deal is "on track" and he is "hopeful" to close it by year's end as previously targeted.
According to Comcast, the FCC's deal review clock would currently run out on Nov. 26, the day after Thanksgiving. The Justice Department and FCC are believed to be working on the review in a more closely coordinated way than usual and could finish their work around the same time.
Comcast planned to file Wednesday a document saying it supports requests by other parties to extend an Aug. 5 deadline for responses to certain review filings, arguing that wouldn't alter the review clock.
Comcast on Wednesday morning reported an 8.6% decline in its second-quarter profit as higher revenue was offset by expenses for the planned acquisition of a controlling stake in NBC Universal and other factors.
The quarterly profit of $884 million compared with $967 million in the year-ago period, which was boosted by income tax benefits that didn't play into the latest quarter as much as last year.
The latest period also included $22 million in operating expenses and $37 million in financing expenses for Comcast's planned NBC Uni acquisition. For the first half of 2010, Comcast's total NBC Uni deal costs amounted to $88 million.
Excluding such special items,quarterly operating profit rose 11% to $2.1 billion though.
Comcast's revenue in the second quarter, which is typically cable's slowest, rose 6% to $9.5 billion as the company's programming unit saw a 12.6% increase and its core cable systems a 4.3% improvement.
The cable giant lost 265,000 net basic cable subscribers, compared with 214,000 in the year-ago period, in which it used special promotions to win over consumers amid a looming transition deadline to digital broadcasts. Satellite TV providers and telecom giants have also been competing aggressively for new subscribers.
In positive signals, Comcast signed up more digital cable users and broadband customers than in the year-ago quarter.
Roberts lauded the "healthy financial and operating results" and highlighted double-digit revenue gains in broadband and telephony services, as well as an improving advertising market. The ad strength led the firm to a 23% ad revenue gain at the cable systems and a 21% gain at the firm's networks unit.
Here are more highlights from the earnings conference call:
- Roberts said Comcast remains cautious, but optimistic about the economic outlook.
- Burke said that the turnaround in the ad market has been "dramatic." Political ad revenue looks to be gaining momentum in the second half of the year, he highlighted. About $2.5 billion of Comcast's total $35 billion revenue is currently ad-based, but that would approach "a very meaningful" $10 billion after the NBC Uni deal.
- Burke signalled that more films could become available on cable VOD day-and-date with their DVD release, arguing tests have proved that it is an incremental business. He cited Time Warner's Warner Bros. and Universal as studios that are consistently making films available that way already.
- Asked about the success of Netflix's streaming service, Roberts said the company makes it easy to search for content and get recommendations, which Comcast's on-screen program guide isn't always good at. He promised the company would work on improvements.