In the face of cord-cutting and increased competition from
streaming services, Comcast Corp. managed to stem the loss of
cable-TV customers and reaffirmed its commitment to the video business. Comcast
on Thursday reported that second-quarter profit rose 7.3% as the movie
“Jurassic World” set box-office records and revenue at the high-speed Internet
and business-services divisions grew, offsetting softness at the company’s TV
Comcast shed 69,000 cable TV customers in the seasonally
weak second quarter, an improvement from the 144,000 subscribers lost a year
ago. Comcast executives attributed the improvement to the accelerated rollout
of their next-generation X1 set-top box and guide, as well as recent
investments to improve customer service. Chief Executive Brian Roberts said
that Comcast is in talks with several other operators, including Cox
Communications and Shaw Communications, to license its X1 product.
For the quarter ended June 30, Comcast reported net income
of $2.14 billion, or 84 cents a share, up from $1.99 billion, or 76 cents, a
year earlier. Revenue grew 11% to $18.74 billion. Earnings matched analysts’
average estimate from Thomson Reuters, while revenue topped expectations of
$18.14 billion. The cable giant has been refocusing after emerging in April
from 14 months in limbo, when it walked away from the ill-fated $45
billion acquisition of Time Warner Cable because of stiff regulatory
resistance. Since then, Comcast has announced plans to offer a new $15-a-month
broadband video service dubbed “Stream” for its Internet customers and started
testing a videogame streaming service over its set-top boxes in partnership
with Electronic Arts.
The company is trying to bolster its Internet offerings and
target younger consumers as more customers in the U.S. opt to cut the cable TV
cord in favor of cheaper video alternatives. In May, Comcast Cable President Neil
Smit said the company’s Internet subscribers had surpassed its
video customers, a significant milestone for a firm that grew up selling cable
TV. As of June 30, Comcast had 22.3 million video customers, compared with 22.5
million Internet customers.
Broadband subscribers outnumber video subscribers, but the
video business still brings in far more revenue. Broadband revenue increased
10% to $3.1 billion, while video sales rose 3.7% to $5.4 billion thanks to
higher cable bills and more customers signing up for advanced services. Business
services revenue jumped 20% to $1.2 billion, helping offset a 2.1% decline in
voice revenue. Overall at the cable business—which includes video, broadband
and voice connections and accounts for the bulk of Comcast’s top line—revenue
rose 6.3% to $11.73 billion.
At the cable networks division, NBCUniversal’s biggest
segment by sales, revenue decreased 1% to $2.45 billion. Operating cash flow, a
measure of profitability, declined 4.6% amid continued ratings pressure.
Revenue at the broadcast-TV segment, which includes the flagship NBC network,
was flat, while its operating cash flow declined 3.7%.
Television networks have spent the past few months
negotiating with advertisers to lock in ad-spending commitments for the coming
season. While any public comments about upfront ad sales are notoriously full
of posturing and fuzzy math, declines this year are likely at least as bad as
last year. Hits like “Jurassic World,” “Furious 7” and “Pitch Perfect 2” helped
operating cash flow at the filmed entertainment division more than double to
$422 million in the second quarter.
here to access the full article on The Wall Street Journal.