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Comcast Profits Up as Company Looks for NBC Primetime Turnaround

During a conference call with investors, executives outlined broad strategic goals for NBCU, including a turnaround in primetime. Just don’t expect one anytime soon

With NBC Universal securely in its pocket, Comcast reported a 7 percent increase in fourth quarter revenue and an 11 percent jump in operating income on Wednesday, as cable customers ordered more services and advertising grew. The company also raised its dividend by 19 percent.

During a conference call with investors, Comcast executives outlined broad strategic goals for NBCU, including a long-term turnaround of NBC's primetime performance. But don't expect one anytime soon.

"Now that we have completed the NBCUniversal transaction, we are uniquely positioned, with scale in distribution and content, to drive product leadership and innovation even further and to expand the entertainment choices we offer consumers," Comcast CEO Brian Roberts said. "We have the right strategic mix of assets, strong momentum and many opportunities."

It was the first earnings report for Comcast since its blockbuster merger with NBC Universal was completed last month — though NBCU results won't be included until next quarter.

One of Comcast's goals for 2011, Roberts said, is to "establish a foundation for NBC broadcast turnaround."

"The biggest opportunity if you move out three, four, five years, is in broadcast," Roberts said. "There's a real strength with NBC News, and there's a weakness in primetime. [But] I don't think we're going to see anything there for awhile."

"The cable channels are in fantastic shape, we want to continue to keep that going," he said.

"Now," Roberts added, "it's really about execution."

Comcast's fourth quarter revenue was $9.7 billion. Advertising grew 29 percent during the quarter, the company said.

But the big bump came from its cable customers. The monthly average total revenue per video customer increased 10.6 percent to $133.43 — as residential customers tacked on added services.

The increase helped offset a loss of 135,000 basic cable customers during the last three months of 2010. Including Internet and digital video customers, Comcast added 698,000 customers during the fourth quarter, and about 2.6 million overall.

The nation's largest cable company posted quarterly net income of $1.02 billion (or 36 cents per share) compared to $955 million (or 33 cents) last year.

The dividend increase, Roberts said, was done "to underscore our optimism in our new company."

Here's the full release:

Comcast Reports 4th Quarter and Year End 2010 Results

>> Strong Financial and Operating Momentum
>> Revenue Increased 7%, Operating Cash Flow Increased 9% and Operating Income Increased 11%
>> Free Cash Flow Increased 46% to $1.1 Billion; Full-Year Increase of 22% to $5.4 Billion
>> Share Repurchases to Increase by 75% to $2.1 Billion in 2011
>> Planned Annual Dividend to Increase by 19% to $0.45 per Share

PHILADELPHIA — (BUSINESS WIRE) — Comcast Corporation (NASDAQ: CMCSA, CMCSK) today reported results for the quarter and year ended December 31, 2010.

Brian L. Roberts, Chairman and Chief Executive Officer of Comcast Corporation, said, "I am pleased to report healthy results for 2010, marked by accelerating growth during the year and real strength in financial and customer metrics in the fourth quarter. These results highlight effective execution in our residential, commercial and programming businesses, as well as the positive impact of a robust advertising market. Our results also demonstrate that our ongoing investments in technology and in products and services, combined with our focus on enhancing the customer experience, are bearing fruit.

"Now that we have completed the NBCUniversal transaction, we are uniquely positioned, with scale in distribution and content, to drive product leadership and innovation even further and to expand the entertainment choices we offer consumers.

"We have the right strategic mix of assets, strong momentum and many opportunities to build value for our shareholders. To underscore our optimism in our new company, we are increasing the dividend by 19% and accelerating our stock repurchases to $2.1 billion this year."

Consolidated Financial Results

Fourth quarter and full-year 2010 results are consistent with historical reporting for Comcast Corporation. Beginning in the first quarter of 2011, NBCUniversal's results will be consolidated in Comcast's financial statements.

Revenue increased 7.2% in the fourth quarter of 2010 to $9.7 billion, while Operating Cash Flow increased 9.0% to $3.7 billion and Operating Income increased 10.8% to $2.0 billion, primarily reflecting strong operating results in the Cable segment.

For the year ended December 31, 2010, revenue increased 6.1% to $37.9 billion, Operating Cash Flow increased 6.4% to $14.6 billion, and Operating Income increased 10.6% to $8.0 billion. Excluding $80 million of NBCUniversal-related transaction costs in 2010 and $20 million in 2009, Operating Cash Flow increased 6.9%.

Cable Segment Results

For the quarter ended December 31, 2010, revenue from the Cable segment increased 6.9% to $9.2 billion compared to $8.6 billion in the fourth quarter of 2009. This increase reflects growth across our Video, High-Speed Internet and Voice residential services, a 53% increase in Business Services and a 29% increase in advertising revenue. Reflecting a growing number of residential customers taking multiple products, rate adjustments, and a higher contribution from Comcast Business Services, the monthly average total revenue per video customer increased 10.6% to $133.43.

For the year ended December 31, 2010, revenue from the Cable segment increased 5.6% to $35.8 billion compared to $33.9 billion in 2009.

For the quarter ended December 31, 2010, Operating Cash Flow from the Cable segment increased 8.7% to $3.8 billion compared to $3.5 billion in last year's fourth quarter. This quarter's Operating Cash Flow margin was 41.2% compared to 40.5% in the fourth quarter of 2009. These results primarily reflect lower high-speed Internet and voice expenses, partially offset by increases in video programming and marketing expenses.

For the year ended December 31, 2010, Operating Cash Flow from the Cable segment increased 6.4% to $14.6 billion compared to $13.7 billion in 2009. Operating Cash Flow margin was 40.7% in 2010 compared to 40.4% reported in 2009.

Customers. As of December 31, 2010, the Cable segment's Video, High-Speed Internet and Voice customers totaled 48.4 million, an increase of 1.3 million or 2.7% over the prior year. In the fourth quarter, combined Video, High-Speed Internet and Voice customers increased by 414,000, reflecting sequential and year-over-year improvement in all three products. Digital video penetration is now 87%, reflecting an increasing number of customers taking higher levels of digital services as well as the completion of the All-Digital initiative in 75% of our footprint. In 2010, 1.0 million additional video customers subscribed to an advanced service like HD and/or DVR, with advanced service customers now representing 51% of total digital video customers.
 
Programming Segment Results

For the quarter ended December 31, 2010, revenue from the Programming segment increased 13.6% to $419 million compared to $368 million in the same time period in 2009. Fourth quarter Operating Cash Flow increased 1.6% to $46 million compared to the same period last year, even as the Programming segment incurred higher programming and marketing expenses in the fourth quarter.

For the year ended December 31, 2010, the Programming segment reported revenue of $1.7 billion, an 11.8% increase from the $1.5 billion reported in 2009, while Operating Cash Flow increased 20.6% to $469 million compared to $389 million last year. These results reflect higher affiliate revenue, a strong advertising market across all networks, ratings strength at E! and increased investment in programming.

Corporate and Other

Corporate and Other includes corporate overhead, Comcast Interactive Media (CIM), Comcast-Spectacor, and other operations and eliminations between Comcast's businesses. For the quarter ended December 31, 2010, Corporate and Other revenue increased 10.5% to $147 million from the $135 million reported in the fourth quarter of 2009, primarily reflecting the impact of the acquisition of Paciolan at Comcast-Spectacor. The Operating Cash Flow loss was $105 million compared to a loss of $108 million for the same time period in 2009. Fourth quarter 2010 Operating Cash Flow includes $23 million of NBCUniversal transaction expenses compared to $20 million in last year's fourth quarter.

For the year ended December 31, 2010, Corporate and Other reported revenue of $501 million, a 27.8% increase over the $393 million reported in 2009, reflecting organic growth and the impact of the acquisition of Paciolan at Comcast-Spectacor, as well as strong advertising revenue growth at CIM. The Operating Cash Flow loss for the year was $434 million compared to a loss of $361 million in 2009. Excluding approximately $80 million of expenses related to the NBCUniversal transaction in 2010, this year's Operating Cash Flow loss would have been $354 million.

Share Repurchase and Dividend

During the fourth quarter of 2010, Comcast repurchased 15.9 million of its common shares for $300 million. For the full year, Comcast repurchased 69.9 million of its common shares for $1.2 billion, reducing the total number of shares outstanding by 2.5%. In addition, Comcast made four cash dividend payments totaling $1.1 billion, resulting in a total return of capital to shareholders of $2.3 billion for 2010.

Today, Comcast announced its intent to accelerate its share repurchases, and now expects to repurchase the $2.1 billion remaining under its share repurchase authorization by the end of 2011, subject to market conditions. This represents a 75% increase over the $1.2 billion repurchased in 2010.

In addition, Comcast announced that it increased its planned annual dividend by 19% to $0.45 per share. In accordance with the increase, the Board of Directors declared a quarterly cash dividend of $0.1125 a share on the company's common stock, payable on April 27, 2011 to shareholders of record as of the close of business on April 6, 2011.