Comcast Corp. Cuts Cable Defections But NBC Universal Declines

NBCU Hurt by 'Battleship,' Lower Content Licensing Revenue

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Comcast Corp., the largest U.S. cable company, reported a better-than-estimated 32% increase in second-quarter profit after signing up more phone and broadband subscribers and losing fewer video customers.

"Battleship" disappointed.

Net income attributable to Comcast rose to $1.35 billion, or 50 cents a share, from $1.02 billion, or 37 cents a share, a year earlier, the Philadelphia-based company said today in a statement. The average profit estimate of 26 analysts in a Bloomberg survey was 48 cents. Revenue rose 6.1% to $15.2 billion, in line with estimates from 23 analysts.

Comcast improved its video guide, boosted internet speeds and added phone features to fight competition from online video companies, satellite companies and Verizon Communications' FiOS and AT&T's U-verse. Comcast has curbed video losses for the seventh consecutive quarter on a year-over-year basis.

"Comcast is probably best-in-class in the industry when it comes to cable results," Jason Armstrong, an analyst at Goldman Sachs & Co., said in an interview before the results were released.

The company repurchased $750 million of its own shares and paid out $438 million in dividend in the quarter.

The company lost 176,000 video subscribers, fewer than the 238,000 it lost a year earlier and a smaller drop than the 184,000 average estimate of 14 analysts surveyed by Bloomberg. It added 156,000 broadband customers and 158,000 phone customers. Analysts had projected a gain of 153,000 internet subscribers and 133,000 phone customers.

Average total revenue per video customer rose 8% to $148.57. Time Warner Cable, the second-largest U.S. cable provider, reports earnings tomorrow.

Comcast rose 1.1% to $32.55 in New York yesterday. The shares have gained 37% this year.

Revenue at NBC Universal, a unit of Comcast, fell 0.8% to $5.5 billion as "Battleship" flopped at the box office, leading to an $83 million operating cash-flow loss in filmed entertainment. NBC Universal's operating cash flow declined 15% to $982 million from a year earlier as sports and original programming costs increased and a content licensing deal with Netflix contributed less than a year earlier.

Broadcast TV revenue fell 9.1% to $1.54 billion, largely because of that licensing revenue decline but not aided any by the NBC network's struggle to gain share against CBS Corp.'s CBS and News Corp.'s Fox, which lead it in prime-time ratings . Broadcast advertising sales slipped 0.2% to $1.11 billion, while cable-network advertising revenue rose 4.1% to $924 million.

"Investors are focused on the magnitude of investments in NBC content, in particular relative to corporate capital allocation policies," Mr. Armstrong said. "The cable business can be on fire, but NBC's results aren't as strong, and the question is how much dilution will come from NBC."

-- Bloomberg News --

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