Recent ad uptick helps boost company's profit
Comcast is set to scoop up NBC Universal just as the ad market rebounds from one of the worst slumps in recent history. The cabler’s chief Brian Roberts acknowledged Wednesday that the timing looks good, and said he still hopes to close by year-end.“It’s not just one segment…Automotive has turned around. There’s pent up demand. It bodes well for the timing of the transaction, in terms of when we chose to do the deal,” Roberts said during a conference call to discuss the cabler’s latest earnings. The advertising uptick, along with strength in premium services like high-speed and digital, helped boost Comcast’s net profit for the first quarter ended in March by 12% to $866 million, offsetting a dip in basic video subscriptions. In other words, fewer people signed up for basic cable, but existing customers added new services at a brisk clip. Revenue grew 3.8% to $9.2 billion. Roberts gave few details on the NBC Universal transaction, but said the new partners are well underway on the planning side, and, when the deal closes, will be ready to execute. Comcast recently hired former Charter CEO Neil Smit to run its cable operations so chief operating officer Steve Burke can focus on integrating the new company, headed by Jeff Zucker. Roberts was pleased by investors’ positive response to a $4 billion debt offering earlier this week of five, 10 and 30-year notes issued by NBC Universal – a first for the company – to help finance the transaction. “Yesterday was a good milestone. We were able to access the capital markets in a very good offer,” he said. Comcast announced in early December, after months of heated speculation, that it would acquire a controlling stake of NBC Universal from General Electric. The transaction will create a joint venture 51% owned by Comcast, 49% by GE. Comcast will contribute its stable of cable channels, which includes Versus, the Golf Channel and E!, worth about $7.25 billion, and will pay G.E. about $6.5 billion in cash. NBC’s vastly more lucrative channel lineup includes USA, Bravo, SyFy, CNBC and MSNBC. The venture will also house the NBC broadcast network and Universal Studios. The complex deal also involved GE being able to pay French conglom Vivendi, which owned a big chunk of NBC Universal that it needed to unload. Given Comcast’s position as the nation’s largest cable operator, many on Wall Street and in Hollywood have anticipated intense regulatory scrutiny of the deal and perhaps some onerous conditions placed on its approval. That’s all still up in the air. The FCC recently extended the period for public comment and petition, which was originally scheduled to expire May 3. Roberts noted that Comcast is four-and-a-half months into the approval process, has had four Congressional hearings, filed its paperwork with the Federal Communications Commission, and begun the documentation phase with the Department of Justice. Comcast execs said NBC U deal-related costs totaled $29 million for the quarter. The company’s advertising revenue jumped 23% to $360 million. Comcast said it signed up 427,000 households for digital service, a 48% jump from a year ago. It added 399,000 high-speed Internet customers – up 21%. But growth in phone customers slowed. Comcast added 275,000 new phone subscribers in the quarter, versus 298,000 the year before. The company lost 82,000 video customers. Cable is still the dominant player in the pay-TV market but satellite and more recent entrants, the telephone companies, are making inroads. Comcast raised rates by an average of 2.4% last quarter compared to more than 5% the year before. The company’s results beat Wall Street’s expectations and its shares were up slightly in early trading, in line with the broader market.
Want Entertainment News First? Sign up for Variety Alerts and Newsletters!