Comcast reports strong earnings

Continuing a cable industry trend, Comcast reported higher cash flow and revenues for the first quarter than analysts and even company executives expected.

Comcast’s operating cash flow rose 27.5% to $808.2 million from $634.2 million. Revenues rose 20% to $2.67 billion from $2.23 billion and operating cash flow from cable operations climbed 13.5% to $97.5 million from $526.3 million. Cable revenues rose 12% to $1.47 billion from $1.312 billion. The company added 40,000 basic subscribers, 203,000 digital subscribers and a 30% weekly net add of high-speed data subscribers following the transition of its Internet access system from Excite@Home to Comcast.net.

“This is a fantastic moment for the cable industry and it’s ironic, given where the marketplace is right now,” Comcast President Brian Roberts said. “This is the highest revenue and highest cash flow growth we’ve ever reported in the last five years and, at the same time, the new products are selling even better than we even thought ourselves. And it’s only the first quarter.”

Things should get better, said Stephen Burke, president of Comcast Cable Communications. With 95% of its networks now upgraded and the Excite@Home switchover complete, Comcast can concentrate on subscriber acquisitions and launching new services such as video-on-demand, he said.

Even advertising sales, which took a pounding in last year’s fourth quarter, are “up 13% in this quarter, and when we look out into the future we see those positive trends continuing in to the second quarter and hopefully beyond,” Burke said.

Comcast hopes later this year to complete its acquisition of AT&T Broadband, which reported similarly encouraging results last week, despite losing subscribers because increased vigilance of non-paying customers and closing out various marketing deals.

“We were obviously disappointed with the cable subscriber losses,” Roberts said. “But in the big picture, I think the current management team is doing a lot of the hard work that we all knew needed to be done to move this massive operation in the kind of direction that Comcast today enjoys.”

That direction includes AT&T’s increased focus on upgrading its plant to “the same level our plant now enjoys,” Roberts said.

Comcast has scheduled a shareholder vote June 26 to approve the deal, which is still going through regulatory approvals processes with the Justice Department and the FCC.