Comcast posts strong Q2 with $16.8B in revenue, delivers best cable subscriber data in six years

Comcast (NASDAQ: CMCSA) reported strong second quarter earnings, driven by its cable network performance, as well as some of its best cable communications numbers in six years.

Overall, the company reported a consolidated revenue increase of 3.5 percent to $16.8 billion, narrowly meeting consensus investor forecasts of $16.9 billion, and consolidated operating cash flow growth of 7 percent to $5.8 billion, beating a consensus prediction of $5.7 billion.

Cable communications revenue increased 5.4 percent to $11 billion, with net video subscriber losses dropping to 144,000, the second best quarterly result for the Philadelphia-based MVPD in six years. In the second quarter of 2013, the company lost 162,000 cable subscribers

Making its second quarterly earnings report since announcing its proposed purchase of Time Warner Cable (NYSE: TWC) in February, Comcast also grew its high-speed Internet subscriber base by 203,000, also its best quarter in six years.

Comcast executives attributed part of the improved subscriber data to demand for its new X1 set-top platform. The company said rollout of the product, which is still only in a small portion of its homes and was hamstrung by inventory issues, is increasing. Comcast would not give data as to how many X1 boxes have been deployed at this point.

"We continue to see strong momentum across our cable and content businesses," said Brian Roberts, chairman and CEO of Comcast. "In Cable, we posted the best second quarter customer results for both video and high-speed Internet in six years and saw tremendous demand for our X1 product, which is a truly transformative experience. We are also pleased with the continued rapid growth of business services, which has quickly become an important engine for the company. NBCUniversal had another excellent quarter with double-digit operating cash flow growth driven by solid results in each segment and a first place finish for NBC for the 2013/2014 broadcast television season."

Here's a breakdown of Comcast's key sectors:

Cable operations: Total customer relationships across video, high-speed Internet and voice communications declined by only 25,000, a 62 percent improvement over Q2 2013. Revenue from video services grew 1.2 percent to $5.2 billion, with 57 percent of customers now subscribing to premium HD and/or DVR services, up from 54 percent in the second quarter of last year.

The uptick in sales of premium products, including X1, offset a 5.4 percent overall increase in cable communications expenses for Comcast, which were driven by a 6.7 increase in programming costs.

Revenue from high-speed Internet grew 9.7 percent to $2.8 billion, with customer growth of 203,000 outperforming the 187,000 adds in Q2 2013. Comcast now touts 21.3 million broadband customers.

Revenue from voice services jumped 1.3 percent to $922 million, with 137,000 customers added to a base that now totals 11 million. Comcast said 68 percent of its customers subscribed to two cable products, and 36 percent subscribe to three.

The cable division's business service's unit, meanwhile, posted revenue gains of 22.4 percent to $965 million.

Programming: Despite a suddenly challenging advertising market, Comcast's NBCUniversal division posted a 20.4 percent increase in operating cash flow to $1.43 billion with revenues nearly flat at 0.3 percent to $6.02 billion.

Cable networks saw revenue grow by 2.6 percent to $2.48 billion, with affiliate fees jumping 4.2 percent and ad sales declining 2.2 percent. Through cost control, the unit's operating cash flow rose 6.3 percent to $914 million.

NBC's broadcast operations, meanwhile, also was able to offset a 1.7 percent decline in ad sales with a rise in retransmission fees from pay TV operators, and saw revenue increase by 4.9 percent to $1.8 billion. Broadcast operating cash flow increased 16.2 percent to $240,000.

The bad news--filmed entertainment: While NBCU's theme parks delivered a nice 12.8 percent uptick in revenue to $615 million, the company's film studios saw revenue decline 15.3 percent in the second quarter to $1.17 billion, with nothing on the movie slate matching up to the $788.7 million global box office performance in 2013 of Fast & Furious 6

For more:
- see the earnings release

Summary: Sizing up pay TV earnings for the second quarter of 2014

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