Comcast revenue up despite shedding 275,000 customers

Revenue at Comcast Corp. rose a healthy 8 percent in the third quarter even though the cable giant shed 275,000 cable-TV subscribers in its continuing struggle to stanch cable-viewer leakage.

So far this year the company has lost 622,000 cable-TV customers, which represents about 3 percent of its subscriber base or roughly $300 million in revenue year-to-date. During the same nine months in 2009, Comcast lost 424,000 cable-TV subscribers.

Company officials said in a Wednesday morning conference call that cable-TV subscriber trends improved in September and October.

Neil Smit, the new head of the cable division, said the weak housing market and unemployment, in addition to rate hikes, were among the reasons for customer losses. People weren't canceling cable TV for new "over-the-top" Internet companies delivering news and entertainment online, he said.

More people were returning to over-the-air TV, Smit said, noting that about 40 percent of those canceling their Comcast service were basic, or lower-tier, customers.

Brian Roberts, the company's chairman and chief executive officer, said the third-quarter results showed that Comcast has a "resilient residential business" and that the cable company was rolling out new-product innovations under the Xfinity brand, which was launched in February.

Among the new products will be a Comcast application for electronic tablets and smart phones later this year, Comcast officials said. The application will be free. Comcast also is experimenting with 2,000 WiFi hotspots in public spaces throughout the Philadelphia area for people who would like to access Comcast outside their homes.

In the conference call, executives pointed out that average revenue per customer rose to nearly $130 per month in the third quarter because of the popularity of the triple-play bundle of cable-TV, phone, and high-speed Internet services. About one-third of Comcast subscribers get the three-service bundle.

Third-quarter revenue rose to $9.5 billion from $8.8 billion in the year-ago quarter. Net income was $867 million in the third quarter compared with $944 million in the comparable period a year ago.

Comcast spent $66 million in the third quarter on transaction and debt-related costs associated with its proposed deal to purchase a controlling interest in entertainment giant NBC Universal Inc.

Roberts said he believed the deal could close by the end of 2010, though some experts expect that government regulatory agencies could delay the closing. The Department of Justice and the Federal Communications Commission are scrutinizing the deal for antitrust concerns and potential public benefits.

Comcast and government officials have been talking intensively for about a month about the deal. Many believe it will be approved but with conditions that limit Comcast's market power as the nation's largest cable company and a major content provider.

Overall, the quarter seemed a good one. Advertising revenue rose 27 percent because of a resurgent automotive sector and partisan political clashes this election season around the nation. Revenue in the business-services division rose 54 percent.

"Our results mark the third consecutive quarter of accelerating growth in revenue and operating cash flow, driven by overall customer growth, a robust advertising market and continued strength in business services," said Roberts in a statement.

He said an ongoing "focus on consistently improving the customer experience and on driving profitable growth will further strengthen our competitive position and build long-term value for our shareholders."

On a day the Dow Jones industrial average fell, Comcast shares climbed 63 cents to $20.27 a share.