Comcast profit jumps 15% but stock falls as Wall Street considers AT&T/Time Warner

Comcast Corp. said Wednesday that it added more than 300,000 TV or internet subscribers in the third quarter as profits jumped 15 percent during a time of telecom-industry tumult and mega-mergers.

The Rio Olympics were the "most successful and profitable" in the company's history, driving $1.6 billion in revenue, the company said in a morning earnings call with analysts.

Still, Wall Street greeted the "terrific" results by beating up the Philadelphia-based cable company's stock as analysts looked for Comcast's next big strategic move after what telecom analyst Craig Moffett called AT&T Inc.'s "master stroke" in reaching a deal to acquire HBO owner Time Warner Inc. for $85 billion.

At the close of trading Wednesday, Comcast was down 3 percent, or $1.96 a share, to $62.56.

The AT&T/Time Warner deal would merge one of the nation's largest wireless carriers with the premium-cable network home of Game of Thrones and popular news and entertainment channels such as TNT and CNN. The telecom giant also said this week that it would price its DirecTV Now online streaming service at $35 a month to compete with the typical able bundle.

Comcast CEO Brian Roberts told analysts in the morning conference call that he would not comment on the proposed AT&T/Time Warner deal, which faces a potentially hostile regulatory environment in Washington. But Roberts also reiterated Comcast's plan to offer its own wireless product for cable and internet customers by mid-2017, adding that "we can make money for shareholders" with it.

AT&T boosted its competitive position through its prior acquisition of DirecTV, making the AT&T/DirecTV combination the largest pay-TV operator in the nation, bragging rights held by Comcast for years.

In many parts of the country, AT&T now offers a "quad-play" bundle of TV, high-speed internet, landline phone, and wireless, and it will vertically integrate into entertainment programming, as Comcast did with its acquisition in 2011 of NBCUniversal.

Roberts, also Comcast's chairman, repeatedly brought the focus of Wednesday's call back to the company's results, which included the highest third-quarter gains in high-speed internet customers in seven years and 170,000 TV additions over the last 12 months, including additions in the third quarter.

"We have a fabulous company," Roberts said.

Revenues rose to $21.3 billion, from $18.7 billion, partly because of Rio Olympics advertising revenue at NBC over the summer. Net income jumped to $2.3 billion, from $2 billion.

But TV customers should perhaps be concerned about rate hikes. Chief financial officer Mike Cavanagh noted that Comcast's programming costs rose 11.4 percent in the third quarter and will be 10 percent higher for the year. Those higher costs are mostly related to TV sports rights and relatively new fees for cable companies to carry free over-the-air networks such as ABC, CBS, and NBC on their systems.

At least some of those programming costs are typically passed on to consumers in higher monthly bills.

NBCUniversal head Steve Burke and cable division CEO Neil Smit said both divisions in the company were working on developing "addressable ads" over the Comcast network that would have the precision of internet advertising or could be a strength in competing against AT&T/Time Warner on its wireless platform.

These advertisements would target individuals likely to buy the products being marketed. The cable industry has attempted to bring them to market for many years. "It's not easy," Burke said. "It's hard to develop these products."

NBCUniversal, Comcast's entertainment-programming subsidiary, had a solid quarter with revenues that included the Rio Olympics climbing 28 percent. Profits, or operating cash flow, rose about 30 percent. A big driver of those profits once again was growth at the Universal theme parks.

Burke said NBCUniversal was "the fastest-growing media company in the country."

Burke added that he was not concerned about recent soft live-sports TV ratings, saying that it could be cyclical and that sports such as the Olympics and the NFL were still the most-watched programs on the flat screen.