Comcast 1st-qtr profit up 6 pct on new customers, especially in digital cable, phone, Internet

Comcast 1Q profit up 6 percent on new customers

PHILADELPHIA — Shares of Comcast Corp. rose Thursday after the nation’s largest cable TV provider reported a 6 percent increase in first-quarter earnings and said it gained more subscribers than expected, without having to do much discounting.

Comcast said that while it did see some customers pare back on purchases of pay-per-view and watch more free video on demand, its average revenue per subscriber still rose in the quarter.

Like the nation’s No. 2 cable company, Time Warner Cable Inc., Comcast said it is seeing some slowdown in the second quarter. Even so, investors cheered Comcast’s ability to reduce its capital spending and double its free cash flow to $1.37 billion in the first quarter — at a time when many companies are in a cash crunch and financing is tricky to come by.

Shares of Comcast rose 36 cents, 2.4 percent, to $15.60 in afternoon trading. Earlier they jumped as high as $16.30.

The Philadelphia-based company earned $772 million, or 27 cents per share, compared with a profit of $732 million, or 24 cents per share, in the first quarter a year ago. Revenue rose 5 percent to $8.84 billion.

The results beat the expectations of analysts polled by Thomson Reuters, who on average were expecting 23 cents per share in profit and revenue of $8.76 billion.

“We are continuing to fine-tune our strategy now to deliver these kinds of solid results and at the same time continue to strengthen the competitive advantages that we believe our platform has,” said Chief Executive Brian Roberts, in a conference call with analysts.

Comcast is ramping up its competition with phone and satellite TV companies. In many markets it will be moving more channels from analog to digital, which frees up space for adding high-definition channels. Comcast expects to be all-digital in 65 percent of its markets by the end of the year, up from the current 35 percent. Efforts are under way in Portland, Ore., Seattle and the San Francisco Bay area, with Philadelphia, Atlanta and Baltimore to come later this year.

Comcast also is investing in ultra-high-speed Internet service and launching interactive advertising.

In nine to 12 months, Comcast plans to introduce a “whole-home” digital video recorder service that will let viewers play back shows on any cable-connected TV in the house. AT&T Inc.’s U-verse TV service already offers the capability. AT&T and Verizon Communications Inc. combined offer video to about 24 percent of the homes served by Comcast.

Comcast also continues to work on a plan dubbed “On Demand Online” that would stream cable TV shows to PCs and other devices, accessible only to subscribers.

Roberts said there isn’t much evidence to support the idea that the rising popularity of watching shows online is leading people to cancel their cable TV service.

In the quarter, Comcast’s count of digital cable subscribers — who pay the most for their TV service — rose by 288,000, while the number of customers with basic cable TV declined 78,000. Comcast added nearly 329,000 new Internet subscribers, which topped forecasts, and 298,000 phone customers, lower than expectations.

Craig Moffett, senior analyst at Sanford Bernstein, said Comcast’s Internet customer gains were strong. In the first quarter, new subscribers equaled half of the combined total added by the three largest phone companies — AT&T, Verizon and Qwest Communications International Inc.

Two-thirds of Comcast’s new Internet customers came from phone companies’ slower DSL lines.

Comcast’s average revenue per customer came to $115.27 per month, up 8 percent, as people signed up for multiple services.

Video revenue rose 3 percent to $4.9 billion. High-speed Internet revenue rose by 9 percent to $1.9 billion while phone revenue was up 32 percent to $777 million.

Comcast’s advertising revenue fell by 25 percent in the quarter to $262 million, with particular weakness in auto and financial ads, a lament heard at many media companies.