Comcast Corp., the largest U.S. cable operator, on Wednesday posted a third quarter profit on better-than-expected gains in high-speed Internet customers and raised its full-year outlook for subscriber growth.
The Philadelphia-based company added 549,100 net new high speed Internet customers in the third quarter, well ahead of even the most aggressive Wall Street estimates of about 475,000.
Subscriber gains at Comcast and Cox Communications Inc., which also reported on Wednesday, helped ease investors’ concerns that cable companies will lose more customers to satellite television and telephone companies.
“The growing TV household market will allow the better cable operators, Cox, Comcast, Cablevision and Time Warner, to grow basic subs while satellite TV companies also report record net adds,” said Thomas Eagan, an analyst at Oppenheimer & Co.
Comcast posted third-quarter net income of $220 million, or 10 cents a share. Excluding a $3.18 billion gain from the sale of its stake in shopping channel QVC last year, it logged a net loss in the third quarter last year of $153 million, or 7 cents a share.
Revenue rose 12 percent to $5.09 billion from $4.55 billion a year earlier.
Comcast spent about $30 million in the quarter to target back-to-school college students, but added 100,000 more customers than it expected.
These customers are expected to generate about $50 million in revenue per year. “That’s a pretty good trade-off, one we’d make again,” Burke said.
Cable operators have vowed to defend their turf against satellite television competitors DirecTV Group and EchoStar Communications Corp., which attracted more video subscribers than expected in the second quarter.
“The company has been trying to figure out the best balance between customer and financial growth,” said Thomas Eagan, an analyst at Oppenheimer & Co.
Despite the redoubled efforts, analysts said the fight for new subscribers would continue. “Concerns about satellite competition are real and they’re going to persist,” Moffett said.
Basic video subscriber growth remained lackluster in the third quarter as the market for new television customers peaks.
Comcast and others have turned their attention to attracting new subscribers to next-generation services such as digital video, video-on-demand services, high speed Internet services and phone services over Internet lines.
“This trend of the shrinking analog-only base should help us as we move to the future,” Steve Burke, chief operating officer of Comcast told analysts, referring to customers who subscribe only to basic video services.
Comcast raised its target for full-year high-speed subscriber net additions to a range of 1.6 million to 1.7 million, up from an earlier forecast of 1.5 million to 1.6 million.
Comcast added 8,500 net new basic cable subscribers in the third quarter, reversing a net loss of 96,000 subscribers in the second quarter. But the third-quarter figure fell shy of Wall Street projections of about 15,000 net additions.
It ended the quarter with 21.5 million basic cable subscribers, essentially the same level as a year ago.
It expects basic cable subscribers to remain at 21.5 million, which implies it expects no net additions in the fourth quarter.
