NEW YORK ( TheStreet) -- Comcast ( CMCSA - Get Report) shares jumped on strong earnings and shareholder enticements, but core cable customers continued to cancel service and find video elsewhere.

The Philly cable shop posted adjusted earnings of 35 cents a share, up from the 29 cent pro forma profit a year ago and 3 cents better than analysts had predicted.

Sales in the fourth quarter were $9.72 billion, 7% above the $9.07 billion level in the year-ago quarter and above the $9.58 billion analysts were expecting, according to Yahoo! Finance.

Free cash flow grew a whopping 46% to $1.1 billion in the fourth quarter due largely to a 5% cut in capital spending.

And while video customer defections slowed in the fourth quarter, Comcast still lost 3% or 757,000 cable customers in 2010. Industry peer Cablevision ( CVC) reported a similar trend Wednesday with a 2% decline in basic video customers for the year.

In an effort to expand beyond the highly competitive cable and Internet delivery model, Comcast acquired media giant NBC Universal late last year. The move is expected to help the cable giant control the costs of TV programming and spread the distribution of shows to multiple devices.

"We have the right strategic mix of assets, strong momentum and many opportunities to build value for our shareholders," CEO Brian Roberts said in a press release Wednesday.

As part of the shareholder value initiative, Comcast said it was increasing its share buyback program by 75% to $2.1 billion and promised to raise the dividend by 19%.

Still, the fourth-quarter results highlight the ongoing struggle to keep its video customer in the face of competition with satellite TV shops Dish ( DISH) and DirecTV ( DTV), along with bundled TV offerings from telcos like Verizon ( VZ - Get Report) and AT&T ( T). Comcast, Time Warner Cable ( TWC) and the nation's other large cable providers have also felt the squeeze of the so-called cord-cutting trend, where video customers cancel cable subscriptions in favor of free Internet video or movie streaming outfit Netflix ( NFLX - Get Report).

Comcast shares were up 3.23% shortly after market open Wednesday.

--Written by Scott Moritz in New York.

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