Comcast Corp. reported an 8.6 percent drop in second-quarter earnings Wednesday partly because of costs related to its pending takeover of NBC Universal, yet it saw improvements in advertising and demand for pricier television services.
The nation's largest cable TV provider is still hoping to win regulatory approval and close by year's end its deal to buy a controlling stake in the broadcaster from General Electric Co.
Those costs aside, Comcast and other cable TV companies have been facing losses in basic television customers as the market matures and competition is fierce. The economy also took a toll: Fewer new homes built mean fewer people are moving and hence won't be needing to hook up cable TV. The high jobless rate also constrains consumer pocketbooks.
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But Comcast found that demand for pay-per-view and pricier digital TV packages is improving.
In the quarter, Comcast reported net income of $884 million, or 31 cents per share, down from $967 million, or 33 cents per share, a year earlier.
Excluding a 2-cents-per-share cost related to NBC Universal and a 4-cents-per-share gain in the 2009 quarter from one-time tax benefits, Comcast would have earned 33 cents per share.
Revenue rose by 6.1 percent to $9.53 billion from $9 billion.
Analysts were expecting income of 32 cents per share on revenue of $9.3 billion, according to Thomson Reuters.
Its shares rose 62 cents, or 3.2 percent, to $19.95 on pre-opening trading.
Free cash flow, a key metric for capital-intensive industries such as cable, rose by 15.8 percent to $1.36 billion.
Comcast, like many cable TV companies, continues to lose video customers. In the second quarter, which is seasonally slow because many people cancel their subscription in the summer months, Comcast lost 265,000 video subscribers to end the quarter with 23.2 million. That's greater than the loss of 214,000 in the same period last year.
But among video customers, 394,000 signed up for the pricier digital cable service. That's higher than the 250,000 that signed up in the 2009 quarter.
Growth in orders for digital cable and pay-per-view, rate increases, among others, offset the loss of video customers. Video revenue rose by nearly 1 percent to $4.9 billion. The average video customer paid $127.78 per month, up 8 percent.
High-speed Internet customers climbed by 118,000, compared with the growth of 65,000 in the same period last year. The number of phone customers rose by 230,000, compared with 233,000 in the second quarter of 2009.
Revenue for cable's broadband business rose 10 percent to $2.13 billion while phone revenue rose 14 percent to $916 million.
Revenue for local ads shown on its cable channels grew 23 percent during the quarter, led by automotive, though all categories are up in double-digit percentages.
