The Philadelphia Inquirer Bob Fernandez column: Comcast profit up 22.4%; cutbacks hinted

Nov 04, 2009 (The Philadelphia Inquirer - McClatchy-Tribune Information Services via COMTEX) -- CMCSA | Quote | Chart | News | PowerRating -- Comcast Corp., which is in talks to acquire NBC Universal Inc., said today that profit soared 22.4 percent in the third quarter as it added 736,000 new phone and high-speed Internet customers, its best performance for the year.

The nation's largest cable TV company lost 132,000 TV customers, which beat consensus analysts' estimate that Comcast would shed 185,000 cable TV customers.

Comcast is facing more competition for cable TV viewers as telephone giants Verizon Communications Inc. and AT&T Inc. expand their pay-TV businesses in Comcast's cable-franchise areas. The Philadelphia company also battles fast-growing DirecTV, which has about 19 million pay-TV customers.

Comcast's third-quarter revenue rose 3 percent to $8.8 billion over last year's comparable period, slightly below the year-to-date revenue growth of 4.3 percent.

Profit rose to $944 million, compared with $771 million in the year-earlier period. Earnings per share were 33 cents, compared with 26 cents a year earlier.

Free cash flow, a financial metric closely followed by Comcast stock analysts, rose 19.8 percent to $1.1 billion. This represents the money left over after Comcast pays its bills and before accounting adjustments.

Comcast chief executive officer Brian L. Roberts, in a morning conference call, declined to directly address the widely publicized talks between Comcast and General Electric Co. over NBC Universal.

Sources say that GE and Comcast continue to talk and that a deal could be announced within a couple of weeks, but it is still contingent on a decision by French media giant Vivendi on whether to sell its 20 percent share in NBC Universal. GE owns the remaining 80 percent.

Comcast is expected to buy 51 percent and eventually 100 percent, of NBC Universal, one of the nation's biggest entertainment programmers.

Comcast executives say they will not use Comcast stock to buy NBC Universal, which is valued at $25 billion to $30 billion.

Michael Angelakis, Comcast's chief financial officer, noted in the conference call that the company, which employs about 100,000, was evaluating its workforce with the intent of cutting costs and that he expected a severance charge in the fourth quarter. He did not say how many jobs could be eliminated.

Cable advertising recovered from its sharply lower levels earlier in the year, Angelakis said, but still declined about 10 percent when compared with the year-earlier third quarter.

The results emphasized the fact that Comcast's core residential cable TV business is slowing. Some view Comcast's future core business as its high-speed Internet service.

Comcast's new 361,000 high-speed Internet customers were about double the combined new Internet customers for Verizon, AT&T, and Qwest Communications International Inc., Comcast executives noted.

Craig Moffett, equity analyst with Sanford C. Bernstein & Co. L.L.C., said Comcast's third-quarter performance was "pretty good" and reinforced the notion of cable companies as "defensive stocks" in the recession.

Stephen Burke, Comcast chief operating officer, said the cable giant heavily marketed its "triple play" bundle in the third quarter, leading to new Internet and phone customers.

Contact staff writer Bob Fernandez at 215-854-5897 or bob.fernandez@phillynews.com.

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