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Comcast revenue up; but profit, TV subscribers down

Revenue at Comcast Corp. rose the fastest since late 2008, but costs associated with the proposed merger with NBC Universal Inc. cut into profit, and the cable giant lost 265,000 cable TV subscribers.

Revenue at Comcast Corp. rose the fastest since late 2008, but costs associated with the proposed merger with NBC Universal Inc. cut into profit, and the cable giant lost 265,000 cable TV subscribers.

Comcast said Wednesday that quarterly sales were $9.5 billion, up 6 percent when compared with the year-earlier quarter of $8.98 billion.

Net income was $884 million, down from $967 million. Comcast reported $59 million in legal and other costs in the NBCU transaction in the current quarter and a $137 million tax benefit in the 2009 second quarter.

"We are very focused on profitable growth," chief executive officer Brian L. Roberts said in a statement, adding in a conference call that he believed the company was "striking a balance" between financial gains and pleasing customers.

Roberts was hopeful that government regulators would approve the proposed $30 billion deal for NBCU by the end of the 2010.

Some industry experts say the regulatory review could stretch into 2011 and Comcast could agree to conditions that would limit its economic power in the TV business.

Wall Street reacted with a yawn to the earnings - with the stock basically flat throughout the day, even though equity analyst Craig Moffett, with Sanford C. Bernstein & Co. L.L.C., noted in his newsletter Wednesday: "On every financial measure, Comcast's results beat expectations."

He and others say new potential regulations on the Internet could hurt Comcast and other Internet providers.

Steve Burke, the No. 2 executive, said that Comcast's cable advertising increased 23 percent when compared with results from a year earlier and that a rebound in advertising boded well for Comcast-NBCU.

The merged company would have about $10 billion in advertising revenue a year because of NBCU's portfolio of cable- and broadcast-TV businesses. Burke is leading the integration of Comcast and NBCU.

Burke said he was encouraged by the recent programming successes at NBCU, the weakest of the four broadcast-TV networks, and mentioned Despicable Me, a 3-D animated film from Universal Studios released July 9. Universal is part of NBCU.

Rate increases in cable TV and Internet businesses led to an 8 percent boost in the average revenue per customer, a key financial measure, to $127.78 per month.

The company also has been selling more high-definition and DVR services, Michael Angelakis, chief financial officer, said. He said 9.7 million customers bought high-definition or DVR services through Comcast in the second quarter.

Expenses for programming content increased 6.5 percent in the quarter, and marketing expenses increased about 12 percent, Angelakis said.

Meanwhile, customer-service expenses fell 2.4 percent, and expenses for technical labor fell about 7 percent, he said.

The second-quarter earnings continued to tell the story of Comcast's cable TV business slowing because of competition and maturation, but other parts of the business are expanding.

The company added 118,000 high-speed Internet customers, or 82 percent more than in the year-earlier quarter, and 230,000 phone customers, or about the same as a year earlier.

In the year-earlier period, Comcast lost 214,000 cable TV subscribers. Comcast said it believed that some of the 265,000 lost subscribers this year were those that had signed onto steeply discounted cable TV packages in 2009 during the nation's transition to digital over-the-air TV transmissions. At the time, Comcast offered a $10-a-month package. Converting those customers into regular Comcast packages was difficult, Comcast said. Comcast considers satellite-TV providers its biggest competitive threat.

Comcast shares closed up 23 cents, at $19.56.