Comcast Cable Subs Drop, Broadband Grows, Content Grows

As a total business entity, Comcast had a good financial quarter. Both revenues and earnings grew at a healthy pace, and the business seems poised for more opportunity. At the same time, Comcast is experiencing a change in its business model where broadband and content are at the heart of its future.

For the last quarter, Comcast, like the second largest cable operator, Time Warner Cable, saw its video subscriber base fall. This has been a consistent theme, quarter after quarter after quarter. While Comcast's 238,000 sub loss as a percentage of total subscription is small, the fact is that it remains a consistent story. On the other hand the wire to the home, enabling broadband and telephone access, continues to reap growth, with its combined total, 337,000 customers, more than making up for the video subscription decline. And less surprising, that their recently acquired programming entity, NBCU, combines with Comcast's other cable networks, is seeing a healthy growth in license fee and advertising revenue. Content certainly remains king.

Can Comcast stem the losses in video subscription? With the rise in IP programming from other platforms, and an almost crippling cost to subscribe to digital cable, it seems highly unlikely. Consumers will continue to shift their viewing habits to other means to find ways to pay for only the programming they want to watch and to hope that the aggregated cost of buying Netflix, Hulu Premium, or other content, remains less than cables' monthly subscription fee. It is highly unlikely that cable companies can lower their rates as programming license fees rise annually. Cable's solution may need to be dropping lower performing cable nets or developing cheaper packages, to lower subscription prices. Unlikely, but perhaps necessary.

For now, the wired pipe to the home is still providing strong revenue, especially with internet and phone growth. While the cable business may continue to erode, content distribution through NBCU and an ad sales rebound will only keep growing the whole Comcast business.