Comcast Reports 53 Percent Lift in 2Q Profit

Comcast on Thursday reported a 53 percent increase in second-quarter profit, as the cable operator posted net income of $967 million, or 33 cents a share, up from $632 million, or 21 cents a share, in the year-ago period.The company’s performance over the last three months outstripped analysts’ expectations, as total revenue grew 4.5 percent to $8.94 billion, beating Wall Street projections of $8.86 billion. Operating cash flow increased 5.5 percent in the quarter, to $3.54 billion.Despite strong Q2 numbers on the MSO side of the ledger, a faltering advertising marketplace continued to nibble at Comcast’s fundamentals. “The overall advertising market continues to be challenging,” said Comcast chief financial officer Mike Angelakis, during the company’s earnings call. “Our local cable ad revenues declined 20 percent this quarter, and we are not seeing any signs of recovery.”Angelakis added that Comcast’s networks unit, which includes the cable channels E!, Style, G4, Versus and Golf Channel, also took a hit. “Our programming division reported a 5 percent increase in revenue; however, that includes a 7 percent decline in advertising revenue in the second quarter.”Sequentially, ad sales at the Comcast nets improved slightly. In the first quarter of 2009, ad sales revenue at the programming unit dropped 8 percent. All told, national and local ad sales account for just 5 percent of Comcast’s total intake.Revenue at the network division grew 5.1 percent to $384 million, while operating cash flow jumped 28.3 percent to $113 million. “Even with these headwinds, I think it’s important to recognize that we are growing the business,” Angelakis said, noting that the networks have tightened spending.During a Q&A interval, Comcast chairman and CEO Brian Roberts updated investors on the company’s investment in Canoe Ventures. While the cable ad-targeting initiative hit a snag earlier this year, when its first product rollout was scrapped, Roberts said he believes Canoe will generate some modest revenue in 2010.“We’re making very good progress. You’re not seeing it in the numbers, and you really won’t see it in the numbers in a material fashion for a while,” Roberts said. “One of the products we’re working on now relates to the rollout of EBIF [Enhanced Binary Interchange Format], which will allow us to do a lot more interactivity, such as RFI [request for information], voting and polling. Depending on how that rollout goes, the partners could have 25 million EBIF-enabled homes by the fourth quarter.”Roberts said the Canoe board had recently sat down for a three-hour progress report, and that the project “is going quite well, as are other things Canoe is doing.” The Comcast chief went on to say that there is some urgency to getting a viable product out the door. “It’s obviously very very important, and we’ve got to get moving,” he said. “I think you’ll see some revenue in 2010 and it’ll be more material in the future.”In early afternoon trading, shares of Comcast rose 8 cents, or 0.53 percent, to $15.14.

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Comcast Reports 53 Percent Lift in 2Q Profit

Anthony Crupi

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