It seems that it was only analysts who were worried about cord-cutters disrupting the cable providers’ business. Last quarter’s results from cable services provider Comcast (NASDAQ:CMCSA) show that cord-cutting was a reaction to the recession. The improving economy is assuaging worries about cord-cutting as customers have been sticking with their cable providers and cable companies’ multi-service offerings keeping households engaged.
Comcast’s Q4 revenues increased 7.2% over the year to $9.72 billion compared with market expectations of $9.58 billion. EPS of $0.35 grew 20.7% over the year and exceeded the Street’s projections of $0.32. The company ended the year with revenues increasing 6.1% to $37.9 billion. EPS for 2010 increased 18.0% over the year to $1.31.
For the quarter, revenues from the Cable segment grew 6.9% to $9.2 billion, and programming revenues grew 13.6% to $0.42 billion. The growth in cable revenues was attributed to 53% growth in Business Services and 29% growth in advertising revenue. The monthly average total revenue per video customer increased 10.6% to $133.43, reflecting the movement of customers to multiple service packages.
At the end of the year, the number of Comcast’s video, high-speed Internet, and voice customers grew 2.7% over the previous year to 48.4 million. Comcast did lose 135,000 cable subscribers during the quarter, but the number was significantly smaller than the previous quarter’s loss of 275,000 subscribers. Overall, the company added 292,000 net high-speed Internet customers and 257,000 net voice customers in the fourth quarter.
In the fourth quarter, Comcast repurchased 15.9 million shares for $300 million.
After a long delay, the Federal Communications Commission (FCC) and the Justice Department finally agreed to Comcast’s ownership of NBC Universal. Under the deal, GE and Comcast will form a joint venture, with Comcast owning 51% stake in NBC Universal for compensation of $6.5 billion. Comcast will also be able to buy out GE’s share in the future. By combining NBC Universal with its existing cable division, Comcast has become the biggest cable business in the U.S. with over $55 billion in combined sales last year. Comcast now poses stiffer competition to the likes of Disney. Besides adding to its size, the deal will significantly increase Comcast’s content, giving it access to the NBC television network, broadcast stations, cable channels including MSNBC and USA, a library of over 4,000 movies with Universal Studios, and part ownership of the online video site, Hulu.
Comcast’s Expanded Spanish Offerings
Comcast recently added a big collection of Spanish shows as part of its on-demand service, Xfinity TV. It launched a Spanish-language entertainment Internet portal which grants Comcast digital customers access to over 500 Hispanic video choices online. It also tripled the on-demand library of Spanish programs to 700 shows, with new content from other Spanish-language broadcasting partners.
Comcast’s stock is trading at $24.16 with a market capitalization of $67 billion. It touched a 52-week high of $25.91 earlier this month.
Meanwhile, Viacom’s (NASDAQ:VIA) Q1 revenues fell 5% over the year to $3.83 billion as growth in Media Networks was offset by a decline in home entertainment sales. The market was expecting revenues of $4.04 billion. EPS of $1.02 was higher than the Street’s expected $0.98.
By segment, media networks revenues grew 6% over the year to $2.38 billion driven by the success of MTV and Nickelodeon. MTV now has three of the top five original cable series on TV: Jersey Shore, Teen Mom, and 16 and Pregnant. Jersey Shore boasts a weekly viewership of 9 million people. For the 16th consecutive year, Nickelodeon remained the number one destination for kids with over 98% penetration in U.S. households. The channel is now working to add over 450 episodes of animation programming over the next three years.
Declining DVD sales impacted revenues for the filmed entertainment segment. Revenues for the quarter fell 16% to $1.5 billion on a 44% decline in home entertainment revenues.
Viacom Expands into Social Games
Viacom recently announced the launch of Monkey Quest, Nickelodeon’s first massively multiplayer online game. The free virtual world game is aimed at kids aged 8 to 12 and lets them create their own monkey, which goes off on adventures to explore lands, battle monsters, and discover the secrets of a lost Monkey King. Additional subscriptions can be purchased to gain access to premium content, including additional avatars and missions. Monkey Quest will help Nickelodeon to expand in the gaming space, where it was primarily present through Neopets.com.
Viacom’s International Growth
As part of its international expansion, Viacom recently acquired minority stake in Italy-based privately held animation and consumer products company, Rainbow Group. In the previous quarter, Viacom increased distribution of Nickelodeon by 30% in Russia, moved MTV to a more widely distributed tier on Sky in the U.K., and launched three networks on a basic tier pack in Australia.
The stock is trading at $50.24 with a market capitalization to $30 billion. It touched a 52-week high of $53.25 earlier this month.