Media/Entertainment

Return to Article

Comcast Trims Cash Flow Targets

Scott Moritz

Comcast (CMCSA Quote) posted a flat third quarter and trimmed full-year cash flow guidance, citing costs related to its National Hockey League contract and rising capital spending.

The Philadelphia-based cable system operator made $222 million, or a dime a share, for the quarter ended Sept. 30, compared with $220 million, or 10 cents a share, a year earlier. Revenue rose to $5.58 billion from $5.1 billion a year ago. Operating cash flow jumped to $2.1 billion from $1.86 billion a year ago.

At the cable division, revenue rose 9.8% from a year ago to $5.3 billion, and operating cash flow rose 13.9%. Video revenue rose 5.7% from a year ago to $3.4 billion, driven by higher revenue per basic user and a gain of 307,000 new digital customers. Basic subscribers fell 0.4% from a year ago to 21.4 million.

Pay-per-view revenue increased 7.9% from the same period last year, driven by movie and event purchases through the Comcast On Demand service. During the third quarter, Comcast Cable deployed 326,000 advanced set-top boxes with DVR and/or HDTV programming capability, ending the quarter with a total of 2.3 million advanced set-top boxes in service. As of Sept. 30, 21.8% of digital customers have one or more advanced set-top boxes.

High-speed Internet service revenues increased 26.1% to $1.0 billion in the third quarter of 2005, reflecting a 24.2% increase in subscribers and strong average revenue per subscriber. Comcast Cable ended the third quarter of 2005 with more than 8.1 million high-speed Internet subscribers, adding 437,000 subscribers during the quarter and resulting in a penetration rate of 19.9% of available homes. Average monthly revenue per high-speed Internet subscriber in the third quarter of 2005 of $42.88 was in line with a year ago.

The company added 46,000 Comcast Digital Voice customers, reflecting the rollout of CDV in new markets including Washington, D.C., Seattle, Baltimore and Denver. As expected, CDV customer additions were offset by a decline in the number of Comcast's circuit-switched telephone customers as Comcast transitions to marketing Comcast Digital Voice. As a result, Comcast Cable reported 12,000 net new phone customers in the third quarter of 2005. Cable phone revenue remained relatively unchanged from the third quarter of the prior year at $171 million.

The company reaffirmed full-year revenue and unit growth guidance, but cut cash flow guidance as a result of costs tied to the launch of NHL coverage on its Outdoor Life Network. The company trimmed operating cash flow growth guidance to 13% from the previous 14%-15% and cut its operating cash flow growth target to 30% from the previous 40%, citing rising capital expenditures tied to set-top box demand and Internet phone costs.