Web 3.0 & Comcast (Part 1)

Introduction

Comcast Corporation is the largest cable operator in the United States and one of the leading communications and entertainment companies in the world focusing on broadband communications and content. Comcast’s operations can be broadly categorized into three segments:

* Cable which includes cable systems, video, regional sports and news networks, Internet and phone services, and Programming. It operates and manages popular television channels including The Golf Channel, VERSUS, E!, Style Network, G4 and AZN Television.

* Comcast Spectacor that owns and manages the Philadelphia 76ers, the Philadelphia Flyers and two large multipurpose arenas in Philadelphia.

* Comcast Interactive Media develops and operates Comcast’s Internet businesses.

Comcast registered a record performance for the quarter ended June 30, 2007. Revenues increased 31% to $7.7 billion for the second quarter of 2007 reflecting continued strong
consumer demand for Comcast’s services and the success of the Comcast Triple Play. Net Income for the quarter increased 28% to $588 million or $0.19/Share over the three months ended June 30, 2006. Fiscal year to date, net income increased 54% to $1.4 billion or 45 cents per share.

Comcast recorded double-digit growth in cable revenue, its 28th consecutive quarter of double-digit OCF growth and fourth consecutive quarter of record-breaking RGU additions. Revenue generating unit (RGU) additions increased 94% to a second quarter record of 1.6 million in 2007 from the 830,000 RGUs added in the second quarter of 2006. The Company ended the quarter with 54.2 million RGUs, an increase of 6.5 million units from one year ago. Year to date through June 30, 2007, Comcast added 3.4 million RGUs, a 77% increase from the same period last year.

The Company added 823,000 new digital cable subscribers in the second quarter of 2007 – the highest level of quarterly digital additions in Company history. Comcast ended the quarter with more than 14 million or 59% of video subscribers taking digital services – an increase from 48% digital penetration one year ago. It also installed a record 2.1 million digital set-top boxes in the second quarter of 2007 – roughly equal to that deployed in the previous six months combined.

The Company added more than 671,000 Comcast Digital Voice (CDV) customers and, in just 2 years, have surpassed 3 million digital voice customers. The CDV service is now marketed to 38 million homes representing 79% of Comcast’s footprint. The Company added 330,000 high-speed Internet subscribers during the second quarter – penetration now exceeds 26%.

Comcast improved its Monthly Average Total Revenue per Basic Subscriber from $90.76 in 2Q06 to $101.02 in 2Q07 in its video segment. Monthly Average Revenue per Subscriber for High Speed Internet was $43.37 in 2Q07 up from $43.06 in 2Q06. Monthly Average Total Phone Revenue per Subscriber was down to $42.92 in 2Q07 from $45.24 in 2Q06.

Though, the Company is focused on the cable segment, it is making efforts to leverage its digital portfolio. Comcast Interactive Media operates a number of entertainment sites. Comcast.net boasts more than 2.5 billion page views, 80 million videos views and 15 million unique visitors a month. Comcast has made a few acquisitions in the online space and entered into various agreements for online advertising that should enable it to grow revenues substantially.

The Company is believed to be in talks with other online companies to either acquire them or partner with them. In April 2007, Comcast acquired online movie ticket destination Fandango for $200 million. Fandango is a fast growing site with about 5 million unique monthly visitors. In April, the Company entered into an online advertising contract with Yahoo under which Yahoo gains exclusive ad placement rights to Comcast.net.

Comcast delivered a pretty strong performance in 2Q07. It has been focusing on building its Triple Play (Cable, Phone and Internet) service. Triple Play is expected to deliver more value to the consumers and higher total revenue per subscriber to the Company.

The Company is also focusing on Business Services and Interactive Advertising to grow revenues. The Company has delivered 28 straight quarters of double digit cable cash flow growth and with its Triple Play and Interactive ventures taking shape, 2007 seems to be a very strong year of growth for Comcast. We will take a closer look at Comcast’s Internet properties in the following posts.

(To Be Continued)

This segment is part 1 in the series : Web 3.0 & Comcast
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