Burke Sizes Up Telcos, Content Opportunities

When it comes to telco TV competition, it looks like Comcast Corp. (Nasdaq: CMCSA, CMCSK) presently views Verizon Communications Inc. (NYSE: VZ) as a much bigger threat than AT&T Inc. (NYSE: T).

That much was clear Tuesday afternoon (Sept. 18) at the Goldman Sachs & Co. "Communicopia" confab in New York when Comcast COO Steve Burke was asked to assess the competitive landscape.

"Verizon is real," he said, noting that the telco is managing to take away some video customers from Comcast. But those customers, whether they churn to the telcos or to DirecTV Group Inc. (NYSE: DTV) and EchoStar Satellite LLC , tend to be analog-only subs, a vulnerable group that is getting smaller and smaller as Comcast increases digital video penetration, he added.

From a technical standpoint, AT&T, which competes with Comcast in markets such as Houston, "has a tougher row to hoe," Burke said. "But they are serious about what they are doing and spending a lot of money. We have a tough time figuring out what damage AT&T is doing to us. But they are coming."

Burke also addressed the HDTV pressure being applied by DirecTV and EchoStar. They "will make great hay out of HDTV," he predicted. In response, Comcast expects to be more aggressive with hi-def in the fourth quarter by launching linear networks, including "the mainline top 20," and expanding its menu of on-demand HD titles.

Burke confirmed guidance of 6.5 million revenue generating unit (RGU) adds for 2007, despite some high-speed Internet softness in the second quarter. "I don't think that changes the fundamental story," he said. "We don't see that train slowing down in 2008 or 2009. [But] there will be bumps along the way."

Burke also pinpointed two new areas where he sees big revenue potential -– business services and interactive advertising.

While Comcast estimates the small- and mid-sized commercial services opportunity in its footprint to be as much as $15 billion, those revenues won't reach material levels until 2008. Interactive advertising, meanwhile, won't become material until 2009 or 2010, Burke forecast.

Burke was also asked to assess Comcast's current mix of assets. While the MSO is not on the lookout for any big cable system deals, it is spending more time looking at ways to acquire content for its video-on-demand (VOD) and high-speed data businesses.

At the same time, don't expect Comcast to seek any deals for major media or Internet companies. Instead, Comcast more likely will look at "small Internet companies," according to Burke.

Comcast, which acquired Fandango in April, reportedly has a deal in place to acquire BuddyTV, a TV community Website that could fit with in Fancast, a portal that's presently in public beta. (See Comcast Buys Fandango.)

— Jeff Baumgartner, Site Editor, Cable Digital News