Comcast posts strong NBCU gains; Cable Communications growth solid



Tom Paine





I found the tone of Comcast's 3rd quarter earnings conference call this morning subdued despite strong results, understandably so given the tragic news of the murder yesterday of 2 young children of a CNBC executive (allegedly) by their nanny. CEO Brian Roberts addressed the matter briefly at the end of the call, saying "we'll do everything we can to support the family in their awful time". Answers during Q&A where unusually vague, I thought, and little news came out of it beyond what was in the numbers themselves.

Results at NBCU were boosted by the Olympics, as well as improved results in filmed entertainment. NBCU revenue was up 31.2% for the quarter and operating cash flow was up 19.9%. Although much of the short-term boost from the Olympics will undoubtedly diminish, Comcast is hoping a longer-term turnaround may be beginning for the network. Roberts noted that NBC just had its 7th consecutive week of winning the 18-49 demographic. CFO Michael Angelakis said that "overall the London Olympics were breakeven when you take into account other Olympic related revenues that are booked over multiple quarters".

Cable Communications had its first $10 billion revenue quarter, or $9.976 billion to be precise, increasing by 6.9%. Growth was led by High Speed Internet (9.3%) and Business Services (34.9%). Cable Commuications' operating cash flow margins exceed 40%, and capital expenitures are flat in absolute terms and declining as a percentage of revenue. Net video subscriber losses for the quarter declined to 117,000, down from 165,000 a year ago.

Earnings per share increased 136.4% in the quarter over the prior year, but excluding gains from Comcast's share of spectrum sold to Verizon Wireless and the sale of its stake in A&E Networks, which both hit in the quarter, EPS increased 39.4%.
Pro Forma results for Comcast, which compare 2012 to 2011 as if NBCU and the other 50% of Universal Theme Parks acquired in mid 2011 were included in 2011 results for the full year and are the most realistic basis for comparing the first nine months, show revenue for the quarter up 15.4% and operating cash flow up 9.5%; the same comparison for the first nine months shows revenue up 9.4% and operating cash flow up 6.4%.

Roberts said Comcast had no plans to expand beyond its existing geographical footprint through an over the top service a la Netflix, Amazon Prime, or Verizon/Redbox. Angelakis said any impact from the NHL lockout are immaterial to Comcast overall. Comcast's X1 service is now in 4 markets, with 2 more to roll out in the next two weeks. While politcal advertising is having some impact, NBCU CEO Steve Burke noted that most political advertising occurs in local markets and most NBC-owned stations are not in battleground states, saying "unfortunately we don’t own any television station in Ohio".

No specific information was offered about uptake on new offerings like X1, Comcast;'s Skype on Xfinity offering, or Xfinity Home. Also, few specifics on the Comcast/Verizon Wireless joint marketing agreement, other than the number of markets it is in, or on what the technology joint venture iniative between the cable partners and Verizon Wireless is up to.

Comcast shares are up 3.5% so far today.



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