No. 1, No. 2 cable firms report rise in 2Q sales

Comcast's, Time Warner's investments are paying off

July 29, 2004|By NEW YORK TIMES NEWS SERVICE

Cable companies, which have been weighed down for years by heavy investments and sagging subscriber growth, are starting to turn the corner.

Comcast Corp. said yesterday that it earned $262 million in the second quarter, after losing $22 million in the quarter last year, thanks to an increase in the number of customers signing up for high-speed Internet and digital video services.

Comcast said it earned 12 cents a share, compared with a net loss of $22 million, or a penny a share, in the second quarter last year. The nation's biggest cable operator also said it would double its share buy-back program.

Comcast's showing, combined with stronger sales growth reported yesterday by Time Warner Cable, the No. 2 cable company, is a sign that the cable industry has started to reap the benefits from a spending and building binge that started in the 1990s.

The industry spent about $85 billion on upgrading its networks so they could offer high-definition television, broadband Internet connections and telephone service. That construction is largely complete, so the companies have been introducing new products and increasing marketing efforts to recoup their investment.

In addition, Comcast is trying to take advantage of its acquisition of AT&T Corp.'s cable service less than two years ago, a move that vaulted the company to the top of the industry. Comcast, with more than 21 million subscribers, is twice as large as Time Warner Cable.

Comcast has been aggressively introducing digital television services, including high-definition programs and video-on-demand, to halt defections to cheaper satellite service.

It also added 1.1 million new digital television customers. The digital video plans also cost more per month, so the additional customers helped raise the company's revenue overall 10.2 percent in the quarter to $5.1 billion.

Comcast also plans to buy back $2 billion in stock, twice as much as it previously announced, in an attempt help its shares. Its stock price has sagged since the company made a failed bid for the Walt Disney Co. this year.

Comcast also said its operating margins have returned to levels before they bought AT&T's cable unit, a sign it has absorbed the merger costs.

Sales at Time Warner Cable rose 10 percent to $2.1 billion, partly driven by a 25 percent gain in the revenue from high-speed data customers.

But Time Warner Inc., Time Warner Cable's parent, said profit slipped 27 percent in the second quarter. Time Warner earned $777 million in the quarter, or 17 cents a share, compared with $1.06 billion, or 23 cents a share, for the second quarter last year.

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