Earnings: Comcast Posts ‘Record Digital Quarter’ On PPV, HD Gains

Comcast (Nasdaq: CMCSA) reported an 80 percent surge in profits for the quarter to end of March, net income rising to $837 million from $466 million in the same period last year. Revenue was up 32 percent to $7.39 billion, beating expectations.

— Video-related revenue rose eight percent to $4.4 billion, “reflecting increasing customer demand for digital features including on-demand, digital video recorders and high-definition television as well as higher basic cable pricing”, according to the conference call.
— The company added a record 75,000 basic customers in the quarter (up 49 percent form last year), and added a record 644,000 digital subscribers (85 percent annual increase) – a record. It now has 13.3 million digital customers, 55 percent of its total video customer base.
— PPV revenues rose 26 percent to $181 million (they have risen an average 20 percent over each of the last nine quarters). Comcast reported “strong increases in movie purchases”.
— Hi-def digital services were a particularly strong driver, with 38 percent of customers (some five million or so) now taking hi-def or DVR services (that’s a 70 percent increase over the same quarter in 2006), each paying $75pm or more.
— They ended the quarter with over 12 million high-speed data customers (26 percent of the total), having added 563,000 in the quarter – another quarterly record. Revenue from this segment increased 21 percent to $1.5 billion. “Our high-speed data business was plateauing two or three years ago and triple-play is really like a booster rocket to our high-speed business – we’re on a different trajectory than we were on a couple of years ago. For each of the last five quarters, we’ve added more high-speed customers than we did in the previous year.”

HD/DVR: “We’re seeing a lot of demand for hi-def and DVR boxes. Twenty percent of all of our 25 million customers now have hi-def or DVR or combined functionality, which is amazing since we’ve only been at it a few years. We added 535,000 of these advanced set-top boxes for the quarter.” Comcast intends to accelerate set-top box roll-out in the next quarter in order to comply with new security regulations by a July 1 deadline.

VOD: “The increase in purchases of movies is very substantial – if that increase would translate to a substantial increase in studio revenue from pay-per-view, our business would increase substantially as well. [We are] trialling in two markets – we’re actively talking to studios about adding a third market.” The company is “optimistic” it can expand the service nationwide.

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