Broadband Cable Association of Pennsylvania

NewsClips

April 22, 2014

Comcast Corp.'s first-quarter profit grew 30%, as it continued to add video subscribers and saw strong growth in its NBCUniversal entertainment arm, thanks to the Winter Olympics. The company added 24,000 video customers in the first quarter, compared with a loss a year ago. Last quarter, Comcast grew its video subscriber base for the first time after 26 straight quarters of decline.

Overall, Comcast reported a first-quarter profit of $1.87 billion, or 71 cents a share, up from $1.44 billion, or 54 cents a share, a year earlier. Excluding gains on sales and acquisition-related items, adjusted per-share profit rose to 68 cents from 51 cents. Revenue increased 14% to $17.41 billion, although excluding the effect of the Winter Olympics it added 6.5% to $16.3 billion. Analysts surveyed by Thomson Reuters projected a per-share profit of 64 cents on $17.04 billion in revenue.

The latest results come as Comcast is seeking to convince regulators in Washington to approve its $45 billion deal to buy Time Warner Cable Inc. On Monday, Netflix Inc. said it opposes the merger because of the dominance the combined company would have in the U.S. broadband market. Comcast has defended the deal, arguing that the merger doesn't change the current state of pay TV and broadband competition for consumers because Time Warner Cable and Comcast's service areas don't overlap. On Monday night, Comcast said Netflix wanted to "unfairly shift its costs from its customers to all Internet customers."

Comcast has earned plaudits from analysts and investors for its strong performance. In recent years most cable operators have been losing video subscribers to phone companies and satellite TV firms. By growing video subscribers in the past two quarters, Comcast is bucking a trend that continues for much of the cable industry. ISI Group LLC analyst Vijay Jayant has noted in research notes, however, that the recent improvement in Comcast's video-subscriber trends came after a "heavy promotional period" in the fourth quarter, as well as a focus on discounted, "value-oriented bundles to drive subscribership" and "skinny" TV bundles targeted at younger consumers in the first quarter. Mr. Jayant said the strategy will give subscriber sign-ups momentum but "may put pressure" on revenue. Comcast's video revenues grew only 1.3% in the quarter, a smaller growth from some previous quarters, due in part to Comcast levying a smaller rate increase in the quarter than it did last year.

Overall, at the company's cable business, which accounts for the bulk of the top line and includes broadband and phone businesses, revenue increased 5.3% to $10.76 billion. Operating cash flow, a measure of profitability, rose 4.3% to $4.4 billion. Meanwhile, Comcast's subscriber growth in broadband and voice slowed. Comcast added 383,000 broadband subscribers compared with 433,000 a year ago. Voice subscribers additions slowed to 142,000 from 211,000 in the prior-year period. Comcast boosted its broadband revenue 9%. Business services revenue jumped 24%.

At Comcast's NBCUniversal, operating cash flow jumped 38% to $1.3 billion, helped by the Winter Olympics. The broadcast TV segment, home of the flagship NBC network, reported revenue growth of 17% even excluding the effect of the Olympics, helped by strong prime-time ratings, especially in late night. Cable networks' operating cash flow grew 4.2% to $895 million. The theme-parks division, meanwhile, posted a decline of 1.5% in operating cash flow. Excluding the effect of the Olympics, total revenue at NBCUniversal rose 8%. Wall Street Journal

Higher prices are the new black for Netflix.

The Los Gatos, Calif., streaming video company plans to raise prices for new customers by $1 or $2 a month this quarter, the company said Monday in its quarterly earnings release. Existing customers will continue to pay the current prices for "a generous time period," the company said. Access to the company's streaming video library currently costs $7.99 a month for subscribers in the United States, and Netflix has been experimenting with pricing models as it spends to improve its selection of movies and television shows and builds out its slate of original content. "Over the last couple years, we've been improving the content selection on Netflix," Chief Executive Reed Hastings said in an interview webcast on YouTube. "We have to eventually increase prices a little bit." In January, the service raised prices for incoming subscribers in Ireland, allowing old customers to keep paying the lower fees for two years. The company said it "saw limited impact" from that increase.

Netflix Inc. stepping up its criticism of Internet service providers, called out AT&T Inc. for offering video-streaming speeds that trail even those of phone companies with inferior technology. AT&T, the biggest landline phone company in the U.S., provided an average speed in March of 1.73 megabits a second for Netflix's service on fiber-based connections, trailing CenturyLink Inc. and Windstream Holdings Inc., which use older DSL lines, Netflix said. AT&T could improve its speeds by using a free interconnection with Netflix, the video company said. "AT&T customers expect a good quality Netflix experience given how much they pay AT&T for their Internet service," Netflix said yesterday in its earnings report.

The salvo from Netflix intensifies a debate between the Los Gatos, California-based company and Internet providers over who should pay for the network improvements needed to handle surging consumer demand for online video. While Netflix agreed in February to pay Comcast Corp. millions of dollars a year for more direct connections, it has asked regulators to eliminate such charges. Roberta Thomson, a spokeswoman for AT&T, didn't have an immediate comment. Netflix said yesterday that it opposes Comcast's plan to acquire Time Warner Cable Inc. because it would give the combined cable carrier even more leverage to extract charges from Internet companies to ensure their services run smoothly for users.

Netflix's opposition to such charges has nothing to do with the transaction, Comcast said in a statement. The Philadelphia-based cable provider said it already abides by U.S. net-neutrality regulations, which prohibit it from discriminating among different types of Internet traffic. Los Angeles Times, Bloomberg

C-SPAN will try to be all over the April 22 oral argument in the Supreme Court on Aereo, or as all over it as they can be when their cameras are not permitted in the court. The court is hearing oral argument on whether Aereo's online TV station delivery service is charging subs for remote access to the free TV signals they are entitled to and home recording rights protected by law, or is providing a public performance without compensation in violation of copyright. C-SPAN plans to stake out the court April 22 from 11:30 to 1:30 (it is the second argument of the day). Lawyers and other stakeholders historically weigh in with their handicaps of the arguments from the steps of the courthouse immediately afterward. C-SPAN will also air a recording of the argument on April 25--the court releases the audio at the end of each week--at 8 p.m., following an airing on C-SPAN Radio at 4 p.m. TV NewsCheck

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