Comcast Corp.’s Q4 Profit Up 10%

Feb 7, 2005  •  Post A Comment

Strong growth in digital video and high-speed data helped Comcast Corp. post a 10 percent increase in fourth-quarter profit as the company gears up to focus on its next engine of growth: digital telephone service.

The Philadelphia-based company, which has just over 21.5 million subscribers, reported a profit of $423 million for the quarter, or 19 cents a share, compared with a year-earlier profit of $383 million, or 17 cents a share. Revenue rose 10 percent to $5.2 billion.

For the year, Comcast swung to a profit of $970 million, or 43 cents a share, after reporting a loss of $218 million, or 10 cents per share, a year ago. Revenue for 2004 advanced 11 percent to $20.3 billion.

Comcast Cable, the company’s largest division, reported an 11 percent increase in revenue to $5 billion for the fourth quarter, and a 10 percent advance to $19.3 billion for the year.

The gains in digital cable and high-speed data subscriptions were major drivers of Comcast Cable’s growth. Comcast said that for the year it added 990,000 new digital cable subscribers, raising the digital cable penetration rate to more than 40 percent from a year-earlier rate of nearly 36 percent. Comcast also added 8,000 basic-cable subscribers in 2004. Growth from both sources helped the cable division’s revenue rise 7 percent for the year.

However, it was high-speed data that proved to be the real star in 2004. The company said it added 1.7 million new subscribers during the year, including more than 437,000 new customers in the fourth quarter alone. That growth helped high-speed data revenue surge 39 percent to $3.1 billion for the year.

Comcast’s advertising business also posted gains in 2004, with ad revenue rising 16 percent to $1.3 billion, thanks to regional and national advertising growth and robust political advertising spending in the third and fourth quarters.

The company’s phone business, meanwhile, continued to be a drag on results as Comcast continues to focus on profitability in the phone business and moves away from the circuit-switch service the company inherited when it acquired AT&T Broadband two years ago. Phone revenue tumbled 13 percent to $701 million as phone subscriptions fell 5 percent.

Comcast laid out a plan in January to introduce an Internet protocol-based telephone service this year, using its high-speed data network to offer a product company officials said will be better than most Internet-based phone services. The company expects to market the service to up to 15 million households by year-end.

The company’s content division reported a 25 percent increase in revenue to $787 million, driven by distribution and advertising increases for all of Comcast’s cable networks.

Comcast Chairman and CEO Brian Roberts declined to discuss the joint bid that Comcast and Time Warner have submitted for bankrupt cable operator Adelphia Communications, but said his company’s interest in the multiple system operator “represents our belief in the cable business’ future.”

But he warned that Comcast is “not out there just trying to get bigger. This is an opportunity with clusters to look at properties that are attractive and that are underperforming,” similar to the strategy the company used in acquiring the AT&T systems.