Cable Technology Feature Article
Comcast Reports Unexpectedly High Profits
By Jerry Biolchini, TMCnet Contributing Writer
The largest U.S. cable company, Comcast, and the owner of NBC Universal (News - Alert), said first-quarter profit rose 17 percent as U.S. subscriber revenue increased at the highest rate in four years.
Comcast’s TV revenue rose to 3.7 percent ($5.1 billion), boosted by rate increases on 72 percent of its customers. The higher fees offset a loss of 60,000 cable-TV subscribers who left Comcast (News - Alert) service in that quarter though it added 433,000 high-speed Internet and 211,000 phone customers. This was far better than industry predictions.
“Comcast reported an impressive quarter today,” Bryan Kraft, an analyst at Evercore Partners Inc. said in a note to clients. “Voice net adds were much stronger than expected,” said Kraft, who rates the shares the equivalent of buy.
This is despite the fact that Comcast’s video/TV service is under pressure from its competitors. The company lost 82,000 video customers, although that was better than what was expected. Video revenue fell nearly 2 percent to $4.84 billion. Contributing to the decline were lower TV cable rates. Comcast was able to raise rates by an average of 2.4 percent compared to more than 5 percent in the same quarter last year. Cable TV companies have steadily been losing customers to satellite TV services and phone companies that offer similar video service.
Slowly but surely, the hold on video and digital content is shifting. In the past customers had only one option if they wanted digital entertainment, but now there are many ways to get the same experience. As cheaper options to TV service such as Netflix or Hulu (News - Alert) gain more customers, cable companies may have to compete at the lower price margins. Similar services like Amazon, Blockbuster and others can play on many of the same TVs that cable can.
As the digital age gets longer cable companies will have to find other ways in which they can compete as others begin to mimic their services.
Edited by Alisen Downey