Whether winning or losing customers, Comcast had its best second quarter in quite some time. The company attracted 203,000 new broadband accounts, while 144,000 former subscribers canceled their video connections. On both measures, this was the best Q2 performance for Comcast in 6 years.
Comcast now has 22.5 million video subscribers and 21.3 million broadband subscribers. VoIP customers increased by 137,000 to 11 million. That combined for a modest loss of 25,000 connections during the quarter, leaving Comcast’s total customer relationships at about 26.8 million, essentially flat from Q1, and up just a bit less than 1 percent from the like quarter a year ago. Triple play customers make up 36 percent of the base, compared to 34 percent a year ago.
Analysts at MoffettNathanson Research note that there has been little new housing growth in the U.S., which leads them to conclude that Comcast is gaining share from its satellite competitors.
The company reported overall revenue was up 3.5 percent, with most of the gain coming from the cable side of the business – with the strongest gains coming from business services (up 22 percent) and broadband (up 9 percent).
NBCUniversal’s income was up 0.3 percent. Carrying the Olympics gave the company a boost, but it also begun squeezing out more retransmission consent fees. Retrans revenue was up 4.9 percent to $1.8 billion.
The company is increasing its investments in its increasingly popular X1 platform and upgrading the network for faster broadband speeds. Overall corporate capital expenditures increased 19.4 percent to $1.8 billion in the second quarter of 2014 compared to the second quarter of 2013. Cable Communications' capex increased $253 million, up 20 percent, to $1.5 billion in Q2, which the company attributed to “increased spending on customer premise equipment related to the deployment of the X1 platform and Cloud DVR, as well as our investment in network infrastructure to increase network capacity.
National Alliance Securities analyst Brian Coyne noted that's going to be continuing good news for Arris. The rollout of X1 set top boxes, which nearly doubled this quarter, along with network upgrades to support faster data speeds will both directly benefit Arris' CPE and Network and Cloud divisions. "Notably, CPE spend of $668M in Q2 grew and 15% QOQ and 25% YOY, while CMCSA now offers its cloud DVR in 31% of its footprint," Coyne noted.
Comcast chairman and chief executive officer Brian L. Roberts said, "We continue to see strong momentum across our cable and content businesses. In Cable, we posted the best second quarter customer results for both video and high-speed Internet in six years and saw tremendous demand for our X1 product, which is a truly transformative experience. We are also pleased with the continued rapid growth of business services, which has quickly become an important engine for the company. NBCUniversal had another excellent quarter with double-digit operating cash flow growth driven by solid results in each segment and a first place finish for NBC for the 2013/2014 broadcast television season."
The big question is whether the Federal Government will approve Comcast’s merger with Time Warner Cable (which includes a system-swapping side deal with Charter Communications and the establishment of a new spinout cable company). That question remains open. MoffettNathanson remains of the opinion that the deal will be approved.