Media Money with Julia Boorstin

Comcast Holding Its Own In Battle With Triple Play Providers


The nation's largest cable provider, Comcast, reported its quarterly earnings in line with expectations. Better than expected gains of subscribers to high-speed Internet and digital phone services reassured Wall Street that Comcast is holding it own in competition with the likes of DirecTV and AT&T.

This helped push the stock higher-- CMCSA is trading up as of this posting.

The cable industry is in the midst of a battle with satellite companies and telecom players to sell you a triple play--a bundle of video, internet and phone services. And today's results from Comcast speak to how the battle between these three industries is going.

Looking at the numbers, Comcast's profit declined 12.5 percent, including a number of one-time events. Excluding items, adjusted earnings rose to 19 cents a share from 17 cents in the year ago quarter while revenue rose 14 percent.

Comcast is managing to steal business from traditional phone operators like AT&T and Verizon   , adding nearly half a million new subscribers for its high-speed Internet service, and 639,0000 customers for digital telephone. Analysts say Comcast added about fifty percent more broadband customers than they'd expected.

The bad news: Comcast lost 57,000 basic video subscribers, while in the same period last year it added 83,000--commentary on a weakening economy, among other things. But Chairman Brian Roberts pointed out that it's better to lose customers who are paying less and gain customers who are paying more. Over the past year the average revenue per customer has grown from $96 to $107.

On Comcast's post-earnings conference call this morning there was lots of talk about the opportunity for the company in the company's transition from analog to digital. The company's COO Steve Burke says the company looks to gain customers when consumers who get their TV via analog signals to an antenna lose that signal. The question is will those customers go to cable or satellite.

My concern about these new customers is that they're likely to go with the least expensive option if they haven't signed up for a cable service yet. And that means these new potential subscribers won't be as profitable as all the new subscribers Comcast gained during the housing boom when people were signing up for new cable subscriptions. In this tighter economy, that source of new business is for the most part over.

Questions?  Comments?