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Video Subscriber Growth, Olympics Give Comcast a Q3 Lift (MESA)

An unexpected rise in video customers, combined with expected strong revenue from NBC’s coverage of the Summer Olympics in Rio and the hit Universal Pictures animated theatrical release “The Secret Life of Pets,” all helped Comcast deliver double-digit revenue growth in the third quarter, ended Sept. 30. Almost 200 million Americans watched at least part of the Summer Olympics on TV alone, Comcast CEO Brian Roberts said on an earnings call with analysts Oct. 26. As a result, primetime ratings in the important 18-49-year-old age demographic “more than quadrupled” those of the other broadcast networks combined and were almost five times greater among millennial viewers, he said.

NBC Universal CEO Stephen Burke estimated that “something like 100 million Americans consumed at least part of the Olympics online.” The Olympics were a “huge phenomenon” online at Facebook, Snapchat and other sites, he said. The “inability” of Comcast to communicate that consumption to advertisers “in an aggregated way is a real problem,” he said. That problem will eventually be solved, but he said: “I don’t think the industry is anywhere near where it needs to be in terms of monetization” of content viewed via non-traditional TV viewing. He went on to say: “What everybody wants is pretty obvious. They want to know what is the total audience delivery of a television show, wherever it gets consumed, and they want it to be done by a third party in a way that is objective and quantifiable.”

Total Comcast third-quarter revenue jumped 14.2% year-over-year, to $21.3 billion, including $1.6 billion from the Olympics broadcast, of which $1.2 billion came from ads, it said. Earnings per share grew 15% to 92 cents.

Comcast cable TV video customers grew by 32,000 subscribers in the quarter, which Roberts said was its best third-quarter result in the past 10 years. Analysts had expected a decline in Comcast video customers, in part due to the increased number of consumers cutting the cord in favor of over-the-top (OTT) services. But Comcast has now added about 170,000 video customers in the last 12 months, Roberts said.

Video revenue grew 4.5% to $5.6 billion in the third quarter. Almost 45% of Comcast’s residential video subscribers now have set-top boxes that use the company’s X1 interactive operating system, it said.

X1is helping Comcast retain video subscribers, CFO Michael Cavanagh said on the call. X1 subscribers have higher customer satisfaction and retention rates, and they also have “three times higher activations of DVRs,” more outlets in homes, and “spend twice as much on pay-per-view” as non-X1 customers, he said, adding: “We’ve been adding about five percentage points of X1 penetration each quarter this year and we kept that pace this quarter.” Comcast added 948,000 net X1 customers in the third quarter, and almost 45% of residential video customers now have X1, he said.

Total Comcast subscribers increased by 216,000 people to 28.3 million in the quarter, Roberts said. That was a 60,000 improvement over the third quarter a year earlier, Comcast said in an earnings news release. It attributed that mainly to increases in “double product relationships.”

The company, meanwhile, added 330,000 Internet subscribers in the third quarter, its best result for that quarter in seven years, it said. But it only added 2,000 voice customers – still a positive for the company as more consumers in general tend to be shifting away from landline phone services to rely on cellphone services or Skype and other Voice over Internet Protocol services.

Still planned by Comcast is the introduction of a wireless service. That will happen in “mid-2017 as part of an attractively priced multi-product bundle,” Roberts said without elaborating on the timing or pricing plans.

Comcast’s technical and product support expenses, meanwhile, increased 6.2% in the third quarter, mainly due to the development, delivery and support of X1, its Cloud DVR technology and wireless gateways, and continued growth in business services and home security and automation services, it said.