By Dow Jones Business News, October 30, 2013, 07:35:00 AM EDT
Comcast Corp. ( CMCSA ) lost more video customers this quarter than in the year-earlier period amid intensified
competition from phone companies, a sign their years-long expansion into TV is continuing to exert pressure on cable.
Comcast attributed the worsened video losses particularly to a more aggressive expansion effort by AT&T Inc. (T) in
Comcast's service area, specifically in the southern and western U.S. AT&T last week said it gained 265,000 new video
customers in the quarter, which it described as its "best quarter in almost five years."
Comcast lost 129,000 video customers this quarter compared with 117,000 a year ago. In recent quarters, Comcast had
mostly improved its video-subscriber losses from the year-earlier periods.
Comcast said its third-quarter profit dropped 18% on weaker revenue, as the cable operator's prior-year results were
bolstered by the 2012 Summer Olympics and gains from asset sales.
Comcast reported a third-quarter profit of $1.73 billion, or 65 cents a share, down from $2.11 billion, or 78 cents a
share, a year earlier. Excluding the asset-sale gains, year-earlier earnings per share were 46 cents. The latest
quarter's revenue slid 2.4% to $16.15 billion, although Comcast said revenue would have risen 5.2% excluding the boost
its NBCUniversal unit received from the Olympics last year.
At the company's cable unit, the biggest part of Comcast's business, revenue grew 5.2% to $10.49 billion. Video
revenue grew 2.9%, as subscriber losses were offset by higher subscription rates and increased sales of advanced
services like high-definition channels and digital-video recorders.
In video, Comcast has generally outperformed its cable peers, even as the U.S. cable industry as a whole has lost
subscribers to satellite TV and phone companies. Comcast has invested aggressively in new rights for on-demand and
streaming, as well as technology like its new Internet-connected set-top box dubbed "X1," which executives said is now
available in 90% of Comcast's service area.
The company said its programming costs grew 9.2% in the quarter due in part to programming rights for video-on-demand
and Web applications as well as higher fees charged by programmers. Comcast also said it is spending more on deploying
new set-top boxes and better WiFi gateways, resulting in a 5% increase in cable capital expenditures in the quarter.
On the call, Neil Smith, president of Comcast Cable, addressed recent reports, including in The Wall Street Journal,
that Comcast was one of several pay-TV providers talking to Netflix Inc. (NFLX) about making its service available
through set-top boxes. Mr. Smith didn't dispute the reports but said the addition of Netflix wasn't a "high priority for
us." He added that "we're open to putting apps on the X1 platform."
At NBCUniversal, operating cash flow--a measure of profitability--grew 9.6%, despite 14% lower revenue compared with
the year earlier period's Olympic Games-inflated quarter. Both the cable networks and theme parks businesses boosted
operating cash flow.
Without the benefits of the Olympics, the broadcast TV segment, home to the flagship NBC network, saw revenue fall 41%
. Operating cash flow fell to $34 million from $88 million a year earlier, although Comcast said the unit's operating
cash flow improved sharply excluding the impact of the Olympics.
Write to Shalini Ramachandran at firstname.lastname@example.org
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.