Comcast Misses Estimates, Time Warner Results Bolstered by Harry Potter

Comcast Corp., the nation's biggest cable television company, reported a five percent profit increase in the third quarter, but fell short of Wall Street's earnings estimate by 6 cents per diluted share, its first miss since July 2008.

The media giant blamed part of the shortfall on higher interest expense and taxes, as well as swings in its investment income from quarter to quarter.

Comcast relied on its cable division to offset a weak quarter from two of its newer businesses, the NBC television network and Universal Pictures.

The Philadelphia-based company earned $908 million, or 33 cents per diluted share, in the quarter ended Sept.30, compared with $867 million, or 31 cents per share, in the same year-ago period. Analysts polled by Thomson Reuters were expecting Comcast to earn 39 cents a share.

Revenue rose 51 percent to $14.3 billion from $9.5 billion a year ago.

On the customer front, Comcast added 229,000 net customers and managed to slow the bleeding of basic video customers, losing 165,000 subscribers compared with a 275,000 in the same period last year. It also added a better-than-expected 261,000 Internet subscribers.

Comcast, which earlier this year completed its acquisition of NBCUniversal, saw mixed results from its entertainment unit, with revenue growing 4.6 percent from a year ago to $5.2 billion. Revenue at NBCUniversal's cable division was up 12 percent, to $2.1 billion, with advertising revenue at those networks up 10 percent to $803 million.

Unfortunately, the public face of NBCUniversal is the broadcast network and that is just struggling, Craig Moffett, an analyst with Sanford Bernstein, told Thomson Reuters. The turnaround of a television network doesn't happen overnight. They are showing a lot of resolve but it is not an easy challenge.

However, Time Warner Inc., the parent of Warner Bros. film studios and HBO, has a different story.

Time Warner said Wednesday that it had a terrific quarter driven by the blockbuster hit Harry Potter and the Deathly Hallows, as well as higher subscription rates and strong advertising.

Net income in the quarter ended Sept. 30 was $822 million, or 78 cents a share, up from $522 million, or 46 cents a share, in the same year-ago-period. Adjusted earnings rose 27 percent to 79 cents a share, beating Wall Street's expectation by 3 cents per share.

Revenues at the New York-based company rose 11 percent to $7.1 billion, from $6.4 billion a year ago, registering the highest growth rate in four years.

However, question remains about its post Harry Potter performance. Time Warner will have to look for new franchises in 2012 if it wants to keep the celebration going.

According to figures compiled by the company, Harry Potter film series have generated $12.1 billion in theatrical and DVD sales over the last decade. The two Batman films have so far brought in $1.38 billion at the box office. And the third movie, The Dark Knight Rises, is scheduled to be released on July 20, 2012.

The company's recent deal with Netflix Inc. on providing online movie video service streaming rights from CW, a joint venture between Time Warner and CBS Corp., is adding value to the traditional TV ecosystem, Barry Meyer, head of Time Warner's filed entertainment unit, said in a statement announcing the deal. The media company is shifting its stance on digital distribution businesses like Netflix.

Comcast rose 1.13 percent to $23.24, or 26 cents, from $22.98 in mid-day trading. Before today, it had added 2.7 percent this year. Time Warner climbed 2.5 percent to $65.19 after the opening bell, but quickly fell back, and is currently trading near yesterday's closing price. The company had lost 5.3 percent this year.

Contact Moran Zhang at m.zhang@ibtimes.com.