Speaking on the company's third-quarter earnings call today, CFO Michael Angelakis said the MSO will take a severance charge in the fourth quarter because of layoffs, but gave no indication on how many employees will be let go or which areas might be most affected.
The cable company, meanwhile, reported a mixed bag of subscriber additions and losses for the quarter, reflecting some strength on the high end but losses lower down the food chain.
Comcast stoked its revenue-generating unit (RGU) fire in the third quarter, adding a total of 604,000 video, high-speed Internet, and voice subs, marking the MSO's best performance so far in 2009. (See Comcast Posts Q3.)
Advanced services were stronger this quarter than last (463,000 digital video adds, 375,000 VoIP adds, and 361,000 high-speed Internet adds), driven by aggressive "triple play" promotions. About 27 percent of Comcast's video subs took voice and data, which is up from 22 percent in the year-ago quarter.
But on the down side, Comcast still shed 132,000 basic video subs, better than the 185,000 analysts were expecting the MSO to lose. However, basic video isn't the only place Comcast is feeling some heat. Comcast COO Steve Burke also warned that Comcast continues to see "a higher percentage of video customers taking lower levels of digital service, which impacts ARPU [average revenue per user]."
Comcast's video ARPU grew 2.7 percent year-over-year, below Sanford C. Bernstein & Co. Inc. 's expected 3.4 percent. However, video ARPU for the third quarter ($116.91), was down versus the second quarter ($117.74). "While the decline is small, it plays to fears that mass market consumers are simply tapped out, and that further 'spin-down' of premium Pay TV packages can be expected," Bernstein analyst Craig Moffett said in a note issued Wednesday.
Send in the Cavalry
On the technology front, Comcast Corp has "Project Cavalry," its big analog reclamation effort, underway in more than half its footprint, and has deployed more than 4.5 million Digital Terminal Adapter (DTA) devices to fuel the initiative so far.
The MSO deployed 1.9 million DTAs alone in the third quarter, Angelakis said. Motorola Inc. (NYSE: MOT), Cisco Systems Inc. (Nasdaq: CSCO), Pace Micro Technology , and Thomson S.A. (NYSE: TMS; Euronext Paris: 18453) are currently supplying DTAs (estimated to cost about $35 per unit) to Comcast, but Huawei Technologies Co. Ltd. is said to be angling for some of that business, too. (See Huawei Breaks US Set-Top Seal and Comcast Posts Q3.)
The MSO is using the simple channel zappers to help reclaim about 40 analog channels in each market, clearing up room for more high-definition television programming, ethnic programming tiers, and channels for speedier Docsis 3.0 services.
Comcast, which expects to spend $1 billion on the project and deploy more than 20 million DTAs total, has already completed the transition in Portland, Ore. and Augusta, Ga. It's about 75 percent of the way there in San Francisco, Seattle, and the MSO's Philadelphia region, Comcast COO Steve Burke said. (See Comcast's $1B Bandwidth Plan .)
In addition to getting valuable spectrum back, the project is also helping operations. Burke said Comcast has seen a 30 percent reduction in truck rolls in Portland, with 80 percent of customers using self-install kits for the DTAs.
Led by Comcast's broad adoption and results so far, other mid-sized MSOs, including Suddenlink Communications and Mediacom Communications Corp. , are starting to pursue DTA-based analog reclamation projects.
Philly joins Comcast's WiMax roster
Comcast chairman and CEO Brian Roberts confirmed that the MSO has launched "High-Speed 2go," its private-label mobile WiMax service offered through a partnership Clearwire LLC (Nasdaq: CLWR), in Philadelphia. Comcast has already introduced the service in Atlanta, in Bellingham, Wash., and in Portland and Salem, Ore. (See Cable Plays Clearwire Card, Comcast's All Clear in Atlanta, Comcast Maxes Out in Portland, and More US WiMax Launches Planned for '09.)
Comcast hasn't released any sub figures for that product, but it "looks to be a pretty good customer-acquisition tool," Burke said, basing those comments on results from the early deployments.
Other tidbits from Comcast's third-quarter call:
— Jeff Baumgartner, Site Editor, Cable Digital News