Comcast Loses 275K Video Subscribers in Q3
A combination of a tough economy, the end of promotional sign-up periods, and service provider competition contributed to a third-quarter loss of 275,000 basic video subs at Comcast Corp. (Nasdaq: CMCSA, CMCSK), a healthy cut above the 189,000 losses that Wall Street was expecting.
Comcast has shed about 622,000 video subs so far this year. Despite those losses, third-quarter video ARPU (average revenue per unit) rose 10.4 percent, to $129.75, as the customers that continued to stay on opted for advanced service tiers and products.
Comcast president Neil Smit said on this morning's call that 42 percent of those third-quarter video losses were basic subscribers. As for the budding "cord-cutting" trend, he said a "small number of customers" are opting to get video over the air, while the effect from over-the-top, broadband-fed services remained relatively negligible.
Comcast gained in all other aspects of its subscription business, including high-speed Internet, voice, and digital video, though the rate of growth is showing signs of slowing. Business services were once again a bright spot, with revenues rising 54.4 percent, to $333 million, in the period. (See Comcast Chases Big[ger] Business .)
Table 1: Q2 Sub Counts
|Q3 2009||Q3 2010||Cumulative Sub Total (End of Q3)|
|Total video net adds||-132,000||-275,000||22.93 million|
|Digital video adds||+463,000||+219,000||19.45 million|
|High-speed Internet adds||+361,000||+249,000||16.69 million|
|Digital voice adds||+375,000||+228,000||8.35 million|
On the financial front, Comcast beat analyst expectations and posted better year-on-year revenues, but saw profits decline in part to costs tied to its pending acquisition of NBC Universal .
Table 2: Financial Snapshot
|Q3 2009||Q3 2010||Change (%)|
|Net Income ($B)||0.944||0.867||-8%|
Table 3: The Street Vs. Comcast
|Analysts' Consensus Estimate Q3 2010||Actual Q3 2010|
|Source: Comcast and Thomson Reuters|
Although Comcast's core video sub base continues to erode, the MSO is still investing in and expanding the reach of its video-optimized content distribution network (CDN). (See Comcast's 'Project Infinity' Takes Flight .)
Initially targeted at traditional video-on-demand (VoD) services fed to set-top boxes, the CDN, which today reaches about 20 percent of Comcast's footprint, presently has the capacity to offer about 70,000 hours of content, but currently provides access to roughly 25,000 video "choices," including 11,000 movies.
"By the end of this year a majority of our markets will have this level of choice," Comcast chairman and CEO Brian Roberts said.
To help customers search and discover all that VoD content, he said Comcast is on track to launch its Web-based Xfinity Remote later this year. That product, which will run on Web browsers and Apple Inc. (Nasdaq: AAPL) iPads and iPhones, will eventually support Android-based devices, as well, Roberts said. (See To Xfinity... & Beyond! and CableLabs Preps iPad App Framework .)
"We're excited about the iPad," Roberts said, adding that it gives Comcast "a chance to start from scratch" when it comes to the development of video guides and navigation tools.
Other nuggets from today's call:
— Jeff Baumgartner, Site Editor, Light Reading Cable