TV Looks Good as NBC Ad Revenue Climbs, Comcast Combats Cord-Cutting

Improvements in Cable Offering Help Comcast Slow Video Declines

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Comcast, the largest U.S. cable provider as well as the owner of NBC Universal, reported profit that topped estimates for the seventh consecutive quarter and posted its best second-quarter video and high-speed data subscriber numbers in five years.

NBC's 'Revolution'
NBC's 'Revolution'

Net income in the three months through June climbed 29% to $1.73 billion from $1.35 billion a year earlier, the company said today in a statement. The average analyst estimate was for net income of $1.69 billion, according to data compiled by Bloomberg.

Comcast lost 159,000 TV customers in a seasonally weak quarter for cable operators as college students disconnect service for the summer vacation, a smaller loss than the 176,000 TV subscribers that fell away in the quarter a year earlier. It gained 187,000 broadband subscribers.

That gave it the best performance in the categories since the second quarter of 2008. "Cable subscriber metrics exceeded our estimates in all three services," Bryan Kraft, an analyst at Evercore Partners in New York, said in a note to clients. He has the equivalent of a buy rating on the shares.

Comcast is improving its TV guide for many of its customers by connecting new set-top boxes to the internet. The cable operator has also invested in mobile rights from its programming partners to give users access to many TV shows and films on the move, helping limit video losses.

NBC gains
Comcast revenue rose 7% to $16.3 billion, surpassing the average analyst estimate of $16 billion. NBC Universal revenue rose 8.9% to $6 billion and the division's operating cash flow jumped 21% to $1.19 billion. NBCUniversal comprises the NBC broadcast network, cable networks including CNBC, USA and Bravo, Universal Pictures and theme parks.

Revenue from NBC's cable networks grew 7.7% to $2.41 billion and broadcast TV sales jumped 12% to $1.73 billion. Comcast acquired the remainder of NBC Universal from General Electric for $16.7 billion in March.

The broadcast network's advertising revenue gained 13%, helped by the popularity of "The Voice" reality show. NBC had a "good year" in terms of ratings, Steve Burke, NBC Universal CEO, said during a conference call today.

NBC reached $2.1 billion in advertising commitments for the coming TV season starting in September, according to a person with knowledge of the contracts. That's a 20% increase from last year as it increased ad rates 7% to 8% and sold more ad time than last year.

"The bull case for Comcast is the upside of NBC Universal," Jaison Blair, an analyst at Telsey Advisory Group, said in an interview. "If Comcast can improve the broadcast programming, the syndication revenues begin to come."

Revenue from Comcast's Universal Pictures studio improved 13% to $1.39 billion. Theme park revenue rose 1.3% to $546 million.

Comcast may examine international acquisition opportunities, but is content with its cable portfolio in the U.S., Chief Financial Officer Michael Angelakis said during the conference call.

~ Bloomberg News ~

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