Comcast's earnings climb 26%

Comcast Corp. beat analysts' estimates with a 26% increase in fourth-quarter profit, but two NBCUniversal units continued to struggle: the NBC broadcast network and Universal Pictures.

For the quarter that ended Dec. 31, the Philadelphia cable television giant posted net income of $1.29 billion, or 47 cents a share, compared with $1.02 billion, or 36 cents, for the year-earlier period. Revenue climbed 3% to $15 billion.

Once again, the company's core business of providing bundles of cable TV channels and high-speed Internet service bolstered its financial results. Comcast added 336,000 Internet customers during the quarter while losing 17,000 video subscribers, demonstrating that the cable company was doing a better job holding on to its customers than it did during the recession.

Comcast said Wednesday that the strong results enabled it to raise its stock dividend 44% to 65 cents a share on an annualized basis.

But NBCUniversal continued to be a mixed bag.

The New York media company, which Comcast co-owns with industrial giant General Electric Co., generated revenue of $5.7 billion — an increase of less than 1% over the year-earlier period. Operating cash flow declined 6.8% to $1.1 billion for the quarter.

Cable television networks, including USA, Syfy, Bravo and MSNBC, increased revenue 5.3% to $2.2 billion. Broadcast TV revenue declined 3.7% to $1.8 billion — reflecting continued ratings problems at the NBC broadcast network.

Filmed entertainment revenue fell 1.8% to $1.3 billion, in part because of lower home entertainment sales. Theme park revenue climbed 4% to $498 million.

Cable networks' operating cash flow increased 15.3% to $923 million, but NBC posted an $80-million loss. The broadcast unit produced $55 million in operating cash flow in the previous-year period. Operating cash flow at Universal Pictures dropped nearly 50% to $89 million.

Comcast said its focus for the last year was integrating NBCUniversal's operations, finding the right management team and stepping up investments in programming.

"As you look out over 2012 and 2013 we are going to start to, hopefully, see some of the seeds we planted bear fruit," NBCUniversal Chief Executive Steve Burke told analysts. "We've said the network is going to take us a number of years to turn around. We also think we can see some improvement in film; our film business has not been doing well but we have a very strong slate in 2012."

Among the recent box-office disappointments were "Tower Heist," "Johnny English Reborn" and "The Thing." Universal has a lot of riding on several upcoming costly releases, including "Battleship" and "Snow White and the Huntsman," as well as the more moderately budgeted "Dr. Seuss' The Lorax."

Comcast Corp. Chief Financial Officer Michael Angelakis warned Wall Street analysts Wednesday that managing programming expenses would be one of the biggest challenges that Comcast faces this year. "The real head winds are programming costs," Angelakis said.

One analyst suggested that Comcast's shiny new toy — NBCUniversal and its peacock network — could ultimately challenge the company's financials.

"Evolutionary biologists have cogently argued that the peacock's tail evolved, paradoxically, as a gigantic display of handicap," Bernstein Research senior analyst Craig Moffett wrote in a report. "Only a very healthy specimen could survive carrying around such a burden."

While NBC's singing competition show "The Voice," starring Christina Aguilera, Cee Lo Green, Adam Levine and Blake Shelton, has kicked off its second season on a high note, attracting 16 million viewers this week, its other expensive and highly touted new drama, "Smash," must prove that it has legs.

At the end of Comcast Corp.'s earnings call Wednesday, Burke, who apparently didn't realize his microphone was still live, acknowledged to his colleagues that while "The Voice" should remain strong, "'Smash' is more problematic."

NBC made an enormous investment in "Smash" despite concerns that a series about the making of a Broadway musical, and the cutthroat competition of New York's theater world, might lack broad appeal. The pilot cost more than $7 million, and production of subsequent episodes run about $4 million. The network has spent at least $10 million more to promote the series, which has an all-star producing team, including Steven Spielberg, Theresa Rebeck, Neil Meron and Craig Zadan.

"Smash" attracted 8 million viewers Monday, a respectable turnout particularly for a network that has struggled this season to launch new shows. A pet project of NBC Entertainment Chairman Bob Greenblatt, the critically acclaimed series starring Katharine McPhee, Debra Messing, Anjelica Huston and Megan Hilty has produced some of the best ratings for NBC in the time period in nearly three years.

Still, the ratings for the second episode of "Smash" dropped 26% in key audience demographics compared with its Feb. 6 debut, and the show steadily lost viewers throughout the hourlong telecast.

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