The early reaction to Comcast’s (NSDQ: CMCSA) earnings report is favorable, with shares edging up in pre-market trading. Although figures were light on the bottom line, the company is gaining market share over telco rivals, as CFO Michael Angelakis noted on the call. On high speed data, he said new premium subscribers were rapidly outpacing economy subscribers. Over two thirds of new high speed ads are ex-DSL subscribers. Said COO Steve Burke: “DSL is the new dial-up”.
– Market Share: Burke: “The growth (in online video) usage is phenomenal… what people are finding as they’re using more high bandwidth intensive applications, having a meg or half a meg of downspeed doesn’t cut it.” Key point: it’s not about price, so telcos can’t regain share on DSL price cuts. It’s about the quality of the service, and if you’re using high bandwidth applications, you won’t go for the inferior alternative. Of course, the telcos are looking to respond to this with their advanced fiber offerings, but so far that’s not up to scale.
– Programming costs: Not worried about trends in programming costs, though the cost to acquire sports may be going up.
More after the jump…
– Digital Transition: In addition to freeing up analog spectrum, CEO Brian Roberts argued that “good things happen when you go all digital”. Among them, is a decrease in cable piracy: “Digital has never been hacked.”
– Net Neutrality: Burke: “We disagree with the FCC’s finding… we’ve never blocked any websites or applications as some articles have suggested… that said, we’ve already said we’re going to adjust our network management techniques to go to a bit more of a consumption-based model for individual consumers.” Goal is to give everyone a great experience. “It’s going to be an evolution; technology changes all the time.
– Acquisitions: Roberts was asked on the call about a statement that the company’s strong balance sheet was a good asset, and whether the company would use that balance sheet for acquisitions: “The point that I was trying to make was that you see a lot of companies that can’t access the capital market (due to the stability of their balance sheets)… we have all of our financing in place…There’s always an opportunity to take advantage of situations.” Angelakis: “We’re in a pretty severe credit crunch, so having a strong balance sheet is clearly an asset… we’re very focused on execution.” But he noted, Comcast has made acquisitions, and will do so in a results-based manner when there’s a good opportunity.