Comcast Corp.'s cable-TV subscriber losses accelerated to 140,000 in the second quarter, but the company added many new high-speed internet customers, the company said Thursday.
The Philadelphia cable and entertainment giant is attempting to acquire the U.K.-based Sky TV as it pivots away from a U.S.-based cable-TV business that's threatened by low-cost Netflix and Amazon streaming services.
Comcast has emphasized its "connectivity" — or internet — businesses. Comcast added 260,000 internet customers compared with 175,000 in the same period a year ago, making it one of the best second quarters for broadband in a decade.
High-speed internet revenue in the quarter jumped 9.3 percent while cable-TV revenues, traditionally Comcast's core, fell 1.9 percent.
Wall Street, which had feared that Comcast's high-speed internet business had slowed over the last year, reacted strongly and pushed Comcast's stock higher. The stock closed at $34.75, up nearly 4 percent or $1.33.
"Comcast's cable segment knocked the cover off the ball," analyst Craig Moffett, a critic of the company's bids to acquire 21st Century Fox and Sky TV, said on Thursday. "They beat on broadband — that's what everyone has been worried about — and they beat on [operating] margins." Moffett added that "cable is doing really well, and yet Comcast is doing its level best to become something other than a cable company."
New Street Research's Jonathan Chaplin headlined his report with "Broadband Is Back, Baby!"
Comcast's second-quarter revenues rose 2.2 percent to $21.7 billion and net income jumped 27.6 percent to $3.2 billion.
Comcast attributed the weak second-quarter revenue figure to its blockbuster-bare Universal film slate at NBCUniversal and the boost in profits to high-margin internet businesses. NBCUniversal revenue was flat, at $8.3 billion, though the broadcast-TV and cable-TV segments did well.
CEO Brian Roberts said the company's second-quarter results were "fantastic." He and Comcast CFO Mike Cavanagh said on a conference call that despite the distractions of Comcast's bids for the 21st Century Fox entertainment assets and Sky TV, Comcast executives were confident in their underlying businesses and the deal-making was not an indication of displeasure in the company.
"Let me reiterate something that perhaps has been lost in recent months," Roberts said. "We have a unique and special company with a terrific team and great operating momentum."
Cavanagh added that the company wanted to maintain its credit rating even with a Sky purchase. Moody's Investors Service has warned Comcast that its credit rating could be downgraded with a big purchase requiring debt.
Comcast recently dropped out of the bidding for the entertainment assets of 21st Century Fox but is still seeking to acquire Sky, which has about 23 million subscribers in the United Kingdom and several other European countries, for $31 billion. Sky also has a streaming service, exclusive agreements to distribute content, and a content arm that includes Sky News.
Comcast has offered to tender Sky shares and shareholders have until Aug. 22 to take up Comcast's offer.