Copyright 2006 AFX News Limited
AFX International Focus
January 9, 2006 Monday 11:26 PM GMT
CHICAGO (AFX) — Comcast Corp. added more than 200,000 digital-voice subscribers in 2005 and expects to sign up more than 1 million additional customers this year, the largest U.S. cable-television operator said Monday.
Philadelphia-based Comcast made the announcement ahead of Chairman Brian Roberts’ appearance later Monday at Citigroup’s annual conference for entertainment, media and telecommunications companies in Phoenix.
At the conference, Roberts told investors that the company now has 1.3 million digital-voice customers, and expects to have well more than 2 million by the end of 2006.
Comcast’s goal is to have 20% penetration of the digital-voice market in five years.
Cable operators face competition not only from satellite broadcasters but increasingly from regional telephone companies. The phone firms’ battle against cable involves broadband, dial-tone and — most recently — video customers.
Cable stocks have languished for the better part of two years, due in large part to the perception that the phone companies can eventually take meaningful market share from the industry.
For this reason, companies like Comcast want to make sure investors are aware of the progress they are making in attracting voice customers, a service that historically has been the domain of the phone firms.
Asked about the phone companies and their apparent effect on cable share prices, Roberts said that it won’t be easy to catch up to cable’s established fiber-optic infrastructure, partly because of the significant cost.
“I don’t believe in the theory that [phone companies will spend to upgrade their plants] because they have to,” he added. “You don’t have to spend good money after bad if there’s no payback.”
Roberts also said that from Comcast’s experience, such a rebuild ‘costs more, not less’ than originally planned.
Among other newer technologies, Comcast arguably has been the foremost proponent of free video-on-demand, which allows users access to various kinds of programming whenever they choose. The technology allows content to be fast-forwarded, rewound or paused.
Roberts pointed out that the company’s 300 free on-demand movies generated 7 million orders for viewing in September, 13 million in October and 15 million in December.
“Some 70% of users said it improves the value of digital cable,” he said, adding that it helps to decrease the number of canceled digital subscriptions.
Music, both videos and long-form concerts, constitutes the fastest-growing video-on-demand category for Comcast, according to Roberts, with 30 million views each month during the fourth quarter. “We just introduced karaoke — go ahead and chuckle,” he quipped. “We had 3 million songs viewed in December.'”
In response to a question from the audience, Roberts said that video-on-demand’s growth has contributed to a slowdown in the number of new channels being attempted. “We’re telling people who come to us [to propose a new network]: You’re probably better off launching on-demand. … There’s no place for a karaoke channel, but on demand, someone is making money off that relationship.”
Turning to other matters, Roberts indicated that the company remains “excited” about the close of its acquisition, with Time Warner Inc., of bankrupt cable operator Adelphia Communications. The deal, he said, is still expected to close by the end of the second quarter.
The executive reiterated that Comcast has no intention of pursuing a major acquisition of a content provider, as it did when it tried to buy Walt Disney Co. in early 2004. “That was a moment in time,” he said. “We’ve now said we’re going to build, not buy.”
Comcast’s shares rose 25 cents to close at $27.11.