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Cable Technology Feature Article

October 27, 2010

Comcast Loses Some Customers but Gets Viewers to Upgrade Service

By Ed Silverstein, TMCnet Contributor

Comcast (News - Alert) Corp. reported better-than-expected earnings and revenue for the third quarter, as customers signed up for more expensive triple packages of cable, voice and broadband service, according to Reuters (News - Alert).

Reuters reported that Comcast – the largest U.S. cable company – stuck with a strategy it has employed throughout the economic downturn: Concentrate on upgrading customers to a more expensive combination of services, broadband and cable.

While the company lost 275,000 basic video subscribers in the third quarter, the average revenue it earned for each video customer rose by more than 10 percent, according to Reuters.

The 275,000 basic video customers is almost twice as many customers as Comcast lost a year ago, and leaves the company with slightly under 23 million video customers, Reuters said.

The losses were more than what most analysts had expected, Reuters reported.

David Joyce of Miller Tabak estimated losses of 221,000 and Todd Mitchell of Kaufman Brothers (News - Alert) had the loss at 150,000.

"For most cable operators, it's about upselling their existing base rather than trying to increase the number of overall customers," said Tom Eagan, an analyst with Collins Stewart, explaining the strategy to Reuters. "They are willing to lose those customers that aren't taking double or triple play packages."

Shares of Comcast increased nearly 2 percent after its quarterly earnings report. The stock has increased about 17 percent this year.

Comcast hopes to get approval from regulators to take control of NBC Universal (News - Alert).

In a statement released with the quarterly earnings report, Brian L. Roberts, chairman and CEO of Comcast Corporation, said, "Our results mark the third consecutive quarter of accelerating growth in revenue and operating cash flow, driven by overall customer growth, a robust advertising market and continued strength in Business Services. As we near completion of our All-Digital and DOCSIS 3.0 deployments, we are increasing the pace of innovation and new product introductions to our customers. We believe this focus on consistently improving the customer experience and on driving profitable growth will further strengthen our competitive position and build long-term value for our shareholders."

Overall, Comcast revenue increased 7.3 percent to $9.49 billion in the third quarter. Net income decreased to $867 million, or 31 cents a share, from $944 million, or 33 cents a share, a year earlier.

Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.

Edited by Juliana Kenny