Key takeaways from Comcast Q3 earnings call

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Six highlights from the No. 1 cable operator’s call with investors and analysts following its report of better-than-expected third-quarter results.

1. Comcast Cable Chief Executive Neil Smit said Comcast’s new Internet Plus offering, which includes HBO Go, a basic video package, Streampix VOD and broadband for $40-$50 per month, is similar to offers the company has tried previously, including Blast Plus, which have proven effective in targeting groups such as millenials. Younger viewers are accustomed to being able to get individual programs and movies whenever they like, on various devices, and the industry fears that such consumers will be reluctant to sign up for traditional cable packages.

2. Smit says there is nothing to report on the company’s preliminary discussions with Netflix about being included as another “channel” on the Comcast set-top box. “It has been, frankly, incredible to me the amount of press coverage this has received,” Smit said. “Our customers can receive Netflix in a number of ways, so it is not really a high priority for us. We are open to putting apps on our X1 platform. We have, for example, Facebook and Pandora there now.”

3. Comcast executives see great opportunity in video-on-demand products that don’t allow users to fast-forward past commercials, meaning they can be usefully monitored by the ratings services using the “C3” currency (which measures shows seen up to three days after their airdate). “We have a lot of shows that are getting a noticeable jump [in ratings] because of that — the conversion from DVR viewing to VOD viewing,” said NBCUniversal Chief Executive Steve Burke. Comcast Chairman Brian Roberts said the X1 cloud platform gets greater engagement from viewers when they know they don’t have to record a program due to its availability on demand.

Generally speaking, the more that subscribers become comfortable with — and reliant upon — the viewer guide and other elements offered by the cable company, the less reason there is to go outside the company’s silo.

Burke said preventing the ads from being skipped in a VOD environment also opens the door, at last, to dynamic ad insertion, in which ads that become outdated or prove to be unsuitable for a consumer based on the data available about his or her buying habits can be switched for more effective commercials.

4. Comcast confirmed that it is considering licensing the X1 platform, which has earned praise for its user-friendly interface. “We have had interest expressed by a number of MSOs, and we are considering the opportunity,” Smit said. “We think the benefit of scale is that we can invest in products like this and continue to refine them, and I think other operators … like the product and we will continue to have conversations. We have no immediate plans, but we … think it is a great product and we think it will be good to get a larger footprint of X1..”

5. Smit says the company is offering usage-based broadband pricing in a few markets, and so far the consumer reaction has been “neutral to slightly positive.”

6. Burke offered the company’s latest take on Aereo, Barry Diller’s cloud-based DVR service that allows users to record over-the-air programming and play it back on a variety of devices. “Well, in terms of Aereo, we and others are suing [them], so obviously we think what they are doing is unlawful. I also think that any content company that has multiple assets is going to look at that technology and see someone circumventing the need to pay for retransmission consent in a negative way. So we will see what happens with the lawsuit, but we think it is a clear violation of law.”

Comcast shares were down 1.4% at $47.02 in mid-morning trading after the company’s third-quarter revenue fell short of most projections, even as its profit topped estimates.

— David B. Wilkerson


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