October 23, 2014 / 11:55 AM / in 3 years

Fewer customers drop Comcast cable subscriptions

A view of the headquarters of Comcast on JFK Boulevard in Philadelphia, Pennsylvania May 21, 2014.Tom Mihalek

NEW YORK (Reuters) - Comcast Corp reported higher quarterly revenue and income on Thursday as more people signed up for its high-speed Internet service and fewer customers dropped their cable subscriptions.

Total revenue at the largest U.S. cable operator, which owns NBC Universal, rose to $16.79 billion in the third quarter, up 4 percent from the year-ago period. Analysts had been expecting $16.83 billion, according to Thomson Reuters I/B/E/S.

Comcast said it added 315,000 net high-speed Internet subscribers, a 5.8 percent uptick over the year-ago period.

About 81,000 customers canceled video subscriptions, far fewer than the net loss of 127,000 in the 2013 third quarter. Analysts had forecast a net loss of 93,000 subscribers, according to StreetAccount.

Comcast said the number of customers who dropped cable subscriptions was the smallest of any third quarter in seven years. It has a total of 26.8 million customers.

Comcast shares were up 3.4 percent at $53.25 in early afternoon trading.

The decrease in cable subscriptions is a closely watched figure that has taken on greater import given two major announcements from Time Warner Inc's HBO and CBS Corp last week.

Both the pay TV network and broadcaster are launching services that allow people to watch programs with only a broadband connection. Cable and satellite distributors are seeking ways to stop consumers, especially younger ones, from dumping their cable subscriptions, or "cutting the cord."

NBC Universal Chief Executive Steve Burke told analysts on Thursday he was surprised by the HBO and CBS news and that both media companies face challenges.

He noted the standalone products represent a big strategic change for Time Warner and CBS. Time Warner has long pushed the notion of "TV Everywhere" which allows cable and satellite customers to access content on any device. CBS has touted its ability to receive retransmission fees - money paid by distributors to CBS to carry the network.

"The existing customers that are sold through cable and satellite are extremely high-margin," Burke said. "When they go directly to consumers via the Internet, they have got to be very careful with cannibalization."

NBC has a stake in video streaming service Hulu, along with Twenty-First Century Fox and Walt Disney Co.

On the media side, Comcast reported that revenue at NBC Universal division inched up 1.2 percent to $5.92 billion on the strength of advertising revenue at broadcast network NBC and its theme parks.

Third-quarter net income increased almost 50 percent to $2.59 billion, or 99 cents per share.

Adjusted for a one-time tax settlement, earnings per share rose to 73 cents from 65 cents in the year-ago period.

Comcast is in the process of acquiring Time Warner Cable, which it had agreed to buy for $45.3 billion earlier this year. Comcast expects the deal to close in early 2015.

Editing by Richard Chang and Matthew Lewis

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