Monday, August 1, 2005

Comcast Sees Strong Demand for Digital Services

Comcast reported strong consumer demand in Q2 for new digital services -- including HDTV, DVRs, VOD and VoIP -- adding 507,000 revenue generating units in the second quarter of 2005, an increase of 22.1% from the 415,000 added in the same quarter last year.

Some highlights:

  • Comcast Cable reported revenue of $5.3 billion for the quarter ended June 30, 2005, representing a 10.1% increase from the second quarter of 2004.

  • Video: Digital cable subscriber and video revenue growth reflects strong consumer demand for new digital features and services including Comcast ON DEMAND, HDTV programming and DVRs, as well as the initial rollout of an enhanced basic - 100% digital service in a number of markets. During Q2, pay-per-view revenues increased 24.0% - the seventh consecutive quarter of pay-per-view revenue growth, driven by more movie and event purchases through the Comcast ON DEMAND service. During Q2, Comcast Cable deployed nearly 300,000 advanced set-top boxes with DVR and/or HDTV programming capability, generating an incremental $5 to $10 of monthly revenue per box.

  • Video revenue increased $192 million or 5.9% to $3.4 billion in the second quarter of 2005, driven by higher monthly revenue per basic subscriber and a 13.3% increase in the number of digital customers. Comcast Cable added 284,000 new digital customers in the second quarter of 2005 and with more than 9.1 million subscribers, digital cable penetration reached 42.6% of basic subscribers. As expected, basic subscribers are essentially unchanged from a year ago at 21.4 million, and declined seasonally by 77,000 or 0.2% from the first quarter of 2005.

  • Cable Modems: revenues increased 28.8% to $982 million in Q2 2005, reflecting a 28.3% increase in subscribers and strong average revenue per subscriber. Comcast Cable ended Q2 with more than 7.7 million high-speed Internet subscribers, adding 297,000 subscribers the quarter for a penetration rate of 18.9% of available homes. Average monthly revenue per high-speed Internet subscriber was $43.34 in Q2, up slightly from Q1. Comcast also recently announced a 50% increase in the speed of its Internet service to 6 Mbps.

  • Voice: added 15,000 Comcast Digital Voice customers (VoIP) in Q2, reflecting the rollout of CDV in new markets late in the second quarter. 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. Comcast Cable reported 2,000 net new phone customers in the second quarter of 2005. Cable phone revenue declined 4.0% from Q2 2004 to $170 million due primarily to a decline in access revenue per customer.

  • Advertising: revenue increased 9.9% to $362 million, reflecting growth of 6.5% in local advertising and growth of 16.7% in regional/national advertising as a result of the continuing success of our regional interconnect strategy. The growth in advertising revenue during the quarter was slightly offset by a decline in political advertising when compared to the prior year. Advertising revenue growth in the second half of 2005 will reflect a significant decline in political advertising when compared to the 2004 election year.

  • CAPEX: Cable capital expenditures increased 4.8% to $936 million compared to the $893 million in the second quarter of the prior year, reflecting the purchase of digital set-top boxes to meet expected demand, as well as certain capital investments, including equipment for digital simulcasting and our integrated service platform, which are expected to decline in the second half of 2005.

See also