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Comcast adds video subs in Q4; Cox kicks tires on X1

Tue, 01/28/2014 - 12:42pm
Mike Robuck

In its first quarterly gain of basic video subscribers in six and half years, Comcast announced this morning that it had added 43,000 video subscribers in the fourth quarter.

Comcast’s robust fourth quarter earnings came on the heels of rumors that it was in talks with Charter Communications to divide up Time Warner Cable. Bloomberg reported yesterday that if Charter bought Time Warner Cable then Comcast would make a deal for the systems in New York City, North Carolina, and New England. Time Warner Cable will outline its operational strategy during its fourth-quarter and year-end conference call Thursday morning. Comcast executives declined to discuss merger and acquisition strategies on this morning’s conference call.

On the conference call, Comcast Cable CEO and president Neil Smit confirmed a Reuters story that Comcast was in talks with Cox Communications in regards to using a white label version of Comcast’s next generation X1 platform and user interface. Comcast CEO Brian Roberts had previously said that his company was considering licensing the X1 software to other cable operators.

Cox is currently using its Trio platform, which includes elements from Cisco/NDS and a search and recommendation engine from ThinkAnalytics, for its high-end video subscribers. Cox launched its Contour service, which works with the Cisco DVR platform and includes the personal recommendation engine from ThinkAnalytics, last year on iOS and Android devices.

“Cox has pioneered the personal video experience with its Contour product and we continue to explore ways to enhance our video experience,” said Cox spokesman Todd Smith. “Platforms that deliver the Contour video experience will continue to evolve, just as the video product has throughout the five decades we’ve served customers. Cox is investigating many options for the delivery of our next generation video services.  One of the options being assessed is Comcast’s X1 platform. This evaluation of the X1 platform is in keeping with our forward-looking focus, and being open to new partnerships as we respond to a quickly evolving video landscape.”

During his cable consolidation efforts last year, Liberty Global’s John Malone pushed for Comcast to share it’s technology with other cable operators.

Comcast’s X1 platform, which was largely rolled out across Comcast’s entire footprint by the end of last year, has helped spur the company’s video subscriber growth. Comcast’s X1, which was originally called “Xcalibur” internally, combines cloud-based navigation, personalization and search functions, and an interactive programming guide with customized apps and social media features. Comcast announced updates to X1 at The Cable Show last year. 

On the conference call, Comcast said that it had “opened up the gates” on X1 by offering it to double play customers after previously only offering it in triple play bundles. The updated X2 guide will be rolled out by the end of the month. In addition, X1 has increased Comcast’s VOD viewership by 25 percent and increased DVR usage.

That Comcast added video subscribers in the quarter wasn’t a surprise given that Roberts had said earlier this month that the nation’s largest cable operator expected an increase, but the number of additions out-stripped some analysts’ forecasts of 10,000 to 20,000 new subscribers. While X1 helped turn the trend of losing video subscribers, the fourth quarter results were also helped along by college students returning to school, and more TV viewing time during the winter months.

For the full year, Comcast lost 305,000 video subscribers to finish with a total of 21.7 million.

Comcast also added 379,000 data customers and 227,000 phone subscribers in the fourth quarter. As of Dec. 31, video, data and voice customers totaled 53.1 million, an increase of 1.8 million or 3.4 percent over the prior year.

Comcast Cable’s business services increased its fourth quarter revenue by 25 percent compared to the same quarter a year ago while advertising was down 7.5 percent.

Comcast’s net income in the three months through December rose 26 percent to $1.91 billion, or 72 cents per share, from $1.52 billion, or 56 cents per share a year ago. The gain was partly due to a one-time tax windfall of $158 million.

Excluding the tax gain, earnings per share came to 66 cents, slightly below the 68 cents per share expected by analysts polled by FactSet.

Revenue rose 6 percent to $16.93 billion, which exceeded the $16.65 billion forecast by analysts. In the fourth quarter, overall cable revenue increased 5.2 percent to $10.66 billion. Thanks in part to “Sunday Night Football, “The Blacklist” and “The Voice,” NBCUniversal’s revenue increased 7.5 percent while operating cash flow increased 14.3 percent.

Comcast also announced it was increasing its share buyback authorization to $7.5 billion — up from $1.5 billion authorized currently — with $3 billion to be spent in 2014. Comcast raised its quarterly dividend by 15 percent to 22.5 cents per share.

"I am very pleased to report strong results for the fourth quarter and the full year 2013,” Roberts said. “Our optimism and confidence in the future is demonstrated by our decision to increase our dividend 15 percent and our plan to repurchase $3 billion of our stock during 2014. Our results highlight the momentum we have achieved and how we are benefitting from scale, our investment in innovative products, and from our focus on operational excellence. Cable's operating metrics improved across video, high-speed Internet and voice for both the fourth quarter and full year, with a return to video subscriber growth in the fourth quarter. NBCUniversal had an outstanding year, with growth in broadcast, cable, film and parks. As we begin 2014, we remain excited about our businesses and intend to continue to prudently invest to enhance our strategic differentiation and to drive growth."

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