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Cocooning Customers Catapult Comcast

Demand for high-end services rises in the wake of Sept. 11's events.

There may be something to this cocooning thing after all.

Comcast

(CMCSK)

, one of the nation's biggest cable TV operators, said Wednesday that the pace of signups for new, advanced services had held up, and to some extent quickened, in the weeks following the terrorist attacks of Sept. 11.

But the company is still unsure of the effect that merging satellite TV operators

EchoStar Communications

(DISH) - Get Report

and

Hughes Electronics

(GMH)

will have on cable's outlook.

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Comcast's disclosure about advanced services growth not only illustrates the company's longstanding operational strengths, but also addresses a fundamental quesion investors are trying to answer amid the current economic downturn and uncertain political environment: how recession-resistant are add-on services such as high-speed Internet access and expanded channel capacity enabled by digitized video signals? The basic cable business, investors generally agree, holds up well during bad economic times, but the evidence on more expensive cable-delivered services is less conclusive. Comcast shares rose 27 cents Wednesday to $35.70.

On a conference call with analysts to discuss the company's financial results for the third quarter ended Sept. 30, Comcast executives said the company had finished out the quarter strongly, adding more than 18,000 digital video cable subscribers per week, in line with the third-quarter average of 18,700 per week that the company disclosed earlier this month, and up from the second quarter's weekly average of 15,500. High-speed data customer signups, despite suffering a hiccup from the bankruptcy filing of Comcast's broadband Internet partner

Excite@Home

(ATHMQ)

, finished out the quarter at 11,000-12,000 per week, higher than the complete third-quarter average of 9,000 per week and the second-quarter weekly average of 7,800 net additions.

Companywide, Comcast reported operating cash flow growth of 16.6% over the third quarter of 2000, including 13% pro forma growth in its cable operations and 10.3% operating cash flow growth at its QVC home shopping channel, which was off the air for nearly a day following the attacks.

On Wednesday afternoon, Comcast's shares were trading at $35.81, up 38 cents.

Asked about the deal announced Monday to combine EchoStar with Hughes, the operator of the DirecTV home satellite service, Comcast President Brian Roberts suggested it could drive down programming prices industrywide, although he was hesitant about going too far out on a limb. One obvious implication of the deal, he said, was that it would create a larger entity buying programming. That, of course, might affect the money Comcast reaps from the channels it owns -- including QVC and the just-acquired Outdoor Life Network -- as well as the revenue other content producers receive in the future.

In an apparent reference to Rupert Murdoch's

News Corp.

(NWS) - Get Report

, the failed bidder for Hughes, Roberts also said he thought EchoStar/Hughes would be focused on running a profitable distribution company, as opposed to a less-profitable distribution company and a profitable content company. "It's slightly better than the alternative," he said. But Roberts said he was still in a "listening mode" about the deal: "I don't think it's a huge near-term effect," he said, "and longer term, I think we have to study it."