Comcast shares surged almost 5% on the news that net income rose 7%, as the company earned $460 million, or 22 cents per share, compared with $430 million, or 19 cents, for the same period in 2005.
Mr. Roberts, the CEO of the country's largest cable operator, spent much of first quarter lamenting what he considered to be a depressed stock price, stagnating in the $26 to $27 range. Today it hit $34.
350,000 new subscribers
The company grew digital-cable subscribers by 350,000, offsetting a loss of 66,000 basic cable homes. It also added 227,000 net phone subscribers and 305,000 high-speed data subscribers. Digital-video penetration is now at 49% of Comcast's 21.7 million video customers. Comcast also looks to add more of what it calls enhanced-basic-cable customers, or those who have low-cost digital boxes that allow them to access the video-on-demand library.
The company detailed how quickly its customers are adapting to new technologies, noting that about 30% of digital customers are subscribing to high-definition DVR products, compared with 28% last quarter and 20% a year ago. VOD use continues to grow as well, with 150 million VOD sessions in June, 33% more than the same month last year.
The cable companies' continued aggressive rollout of digital cable is fueling DVR penetration. According to research conducted by Cable and Telecommunications Association for Marketing (CTAM), digital-cable households are the most likely to have a DVR -- 30% of them have the time-shifting device vs. 22% of satellite customers. DVR penetration in cable households overall -- including both basic- and digital-cable subscribers -- has more than doubled, rising to 17% in 2006 compared to 7% in 2005.
Ad revenue up 8%
Advertising revenue, a small but growing part of Comcast's total profits, was up about 8% (the increase drops to 6% when political ads are excluded). Comcast Chief Operating Officer Steve Burke did touch vaguely on a couple of addressable advertising trials the company is conducting on a small scale.
"You're going to see us put our toe in the water in terms of interactive advertising, and we are very bullish on that immediate and long-term," he said.
Comcast executives also said they expected the Adelphia transaction, which will add 1.7 million new subscribers, to close in the next few days. The FCC approved the deal earlier this month.