Comcast Q1 results surprise Street
Cabler trades basic subscribers for broadbandComcast rebounded from a fourth-quarter earnings disappointment, posting first-quarter results Thursday that surprised Wall Street with better-than-expected broadband user additions and revenue.
Despite another basic cable subscriber decline, "overall subscription growth remains very healthy, with little sign of the broader economy's macro-economic weakness," Sanford Bernstein analyst Craig Moffett said.
Comcast management said late last year that it had seen some impact from a sluggish U.S. economy. But Thursday's theme was that the company had made adjustments to get back on track. "Our performance demonstrates that our operating strategy is working in an economic and competitive environment that continues to be challenging," chairman and CEO Brian Roberts said.
Meanwhile, COO Steve Burke in a conference call applauded Time Warner and its Warner Bros. film unit for offering all theatrical DVD releases to cable operators for day-and-date VOD use as TW CEO Jeff Bewkes unveiled Wednesday.
"We're really happy Warner Bros. took the step they did," he said without saying when Comcast would sign a formal deal to roll day-and-date films out across its footprint. "We hope other studios will follow suit. Some are taking a wait-and-see approach."
Burke said Comcast's research supports TW's decision as it has shown day-and-date VOD augments rather than cannibalizes film profits.
The largest U.S. cable operator's first-quarter profit of $732 million was down 12.5% from a year ago. Revenue rose 14% to $8.4 billion.
Comcast lost another 57,000 basic cable subscribers in the quarter, but its 492,000 high-speed Internet user additions topped most estimates by 50%. Gaining digital video, broadband and telephony customers "is a pretty good trade-off" in a competitive market, Burke said.
He also suggested that the transition to all-digital TV broadcasts as of February 2009 represents an opportunity for Comcast and its competitors as consumers using over-the-air TV signals via an antenna will be in play.