Comcast Stems Cable-TV Customer Losses as Profit Rises 4.7%

By Alex Sherman - Nov 2, 2011 9:06 PM GMT+0700

Comcast Corp. (CMCSA) said third-quarter profit rose 4.7 percent as the largest U.S. cable company lost fewer TV customers than anticipated and added broadband customers.

Net income was $908 million, or 33 cents a share, compared with $867 million, or 31 cents, a year earlier, the Philadelphia-based company said today in a statement.

Comcast added 261,000 broadband Internet subscribers, topping the 230,000 average estimate of 10 analysts. The company lost 165,000 video customers, fewer than the projection of 191,000. It’s the fourth consecutive quarter that Comcast has stemmed TV losses from a year earlier.

“All the key metrics in the cable business were in line or better,” said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York with an “outperform” rating on the company’s shares. “Comcast is an attractive place for investors to hide over the next 12 months. It bears limited risk in the event of a meltdown in Europe, it’s got an attractive dividend and a significant share repurchase program.”

Revenue rose 51 percent to $14.3 billion from $9.5 billion a year ago, in line with analysts’ estimates. NBC Universal accounted for $5.2 billion of total sales. Comcast acquired 51 percent of NBC Universal from General Electric Co. in January.

Comcast rose 2.2 percent to $23.48 at 10:04 a.m. New York time. The shares gained 4.6 percent this year before today.

NBC Universal Slips

NBC Universal’s operating cash flow -- or earnings before interest, taxes, depreciation and amortization -- dropped 9.3 percent from a year earlier as it increased spending on broadcast television and couldn’t replicate the box-office success of “Despicable Me” in 2010.

NBC remains stuck in last place this fall in audience ratings among the major networks, trailing CBS Corp. (CBS)’s CBS, News Corp. (NWSA)’s Fox and Walt Disney Co. (DIS)’s ABC, according to data from Horizon Media Inc. Comcast said in May it would spend $300 million more for TV programming, and it won’t limit itself to that figure, NBC Universal President and Chief Executive Officer Steven Burke told analysts on a conference call.

“Comcast’s message has been it got into NBC too late to influence the fall,” said Jason Armstrong, an analyst at Goldman Sachs Group Inc. in New York who recommends buying the shares. “So what you’re seeing right now, Comcast is saying, ‘You can’t pin that on us. If things go wrong next fall, then you pin it on us.’”

Revenue at the cable networks -- including CNBC, USA and Bravo -- rose 12 percent to $2.1 billion.

Investment Writedown

Excluding some items, profit was 38 cents a share. Analysts anticipated 40 cents, the average of estimates compiled by Bloomberg. The company said it wrote down the value of a non- cash investment in the quarter, resulting in a charge against earnings of 3 cents a share, compared with a 2-cent gain a year ago. An accounting change related to the NBC Universal acquisition shaved off 2 cents in the quarter, the company said.

Comcast repurchased $600 million of its own shares in the quarter, up from $525 million in the previous period. The company has $491 million remaining in the current buyback program and plans to decide on a new repurchasing authorization for 2012 during this quarter.

Including Comcast’s annual 45-cent dividend, Comcast returned $909 million to shareholders during the third quarter, Chief Financial Officer Michael Angelakis said on the call.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net