Comcast Profit and Revenue Beat Analysts' Expectations -- Update
28 July 2017 - 1:55AM
Dow Jones News
By Austen Hufford
Comcast Corp.'s entertainment unit surged in the second quarter,
helped by the strong box-office performance of "The Fate of the
Furious," lifting profit and revenue even as cable video subscriber
losses ticked up.
At the NBCUniversal media division, revenue rose 17% to $8.33
billion. Revenue in the filmed entertainment division jumped 60%,
thanks to the latest installment of the "Fast and the Furious"
franchise, which offset disappointing results from "The Mummy"
reboot.
Comcast shares rose 1.5% to $39.94 in morning trading.
The cable networks and broadcast TV units grew revenue and
earnings due to increases in subscription fees from pay TV
providers, but both also saw a decline in ad sales because of
ratings softness. Cable networks' ad revenues declined 0.9% to $906
million, while broadcast TV ad revenue declined 1.2% to $1.27
billion.
In the cable business, the company lost 45,000 residential
television customers, compared with a loss of 21,000 in the same
quarter last year.
Comcast has generally managed to withstand the turmoil in cable
TV from cord-cutting better than some peers in pay television. In a
tough environment, with consumers gravitating to streaming services
such as Netflix, Amazon, Hulu and Sling TV, the company has added
net video subscribers in five of the past seven quarters. The
cord-cutting has taken a toll on TV ratings, however, for
NBCUniversal's channels just like those of many other media
companies.
To help prevent customers from dropping its services, Comcast
recently started offering wireless service, adding a fourth pillar
to the typical television-phone-internet bundles. The mobile
service is only for customers who subscribe to at least its
internet service already.
The cable operator is relying on a five-year-old network-resale
agreement with Verizon Communications to offer its mobile service.
Comcast, along fellow cable provider Charter Communications Inc.,
has explored a deal with Sprint Corp. that could provide an
alternative reseller arrangement, potentially with better terms,
people familiar with the matter have said.
On a call with analysts, executives implied the company was
unlikely to pursue a large deal in the wireless industry. Comcast
Chief Executive Brian Roberts said the company is happy with its
plan of being a reseller and noted that it is still early days for
Xfinity Mobile.
"We really feel we're not missing anything," Mr. Roberts said.
"No disrespect to wireless. It's a tough business."
Comcast and industry analysts point to its investment in X1, a
cloud-based, set-top box system, as a reason its video business has
held up. The company said that 55% of its residential video
customers now have X1, up from nearly 40% in the same quarter last
year.
Comcast said that over-the-top streaming services are "not all
that material" to its business.
"We're skeptical that it's going to be a very large business or
profitable business for the people that are in it and they're off
to a relatively slow start," Steve Burke, CEO of Comcast's
NBCUniversal, said on the call.
Meanwhile, Comcast and other cable providers stand to benefit on
the internet access side of their business as streaming TV
subscriptions and usage increase. Comcast added 140,000 residential
internet customers in the second quarter, down from 176,000
additions in the year-earlier period.
Total revenue per customer relationship, Comcast's unit revenue
figure for its cable division, increased 2.2% to an average of
$151.19 a month.
Comcast lost 50,000 residential voice customers in the quarter,
compared with an addition of 35,000 in the year-ago quarter.
Overall revenue for Comcast's cable division, which makes up
more than 60% of the company's total revenue, rose 5.5% to $13.12
billion.
In all, net income rose to $2.51 billion, or 52 cents a share,
up from about $2.03 billion, or 41 cents a share, a year ago.
Revenue grew 9.8% to $21.17 billion.
Revenue and profit exceeded estimates from analysts, who were
projecting earnings of 48 cents a share on $20.86 billion in
revenue, according to Thomson Reuters.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
July 27, 2017 11:40 ET (15:40 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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