UPDATE 3-Comcast profit up as digital TV transition helps

* Q1 EPS $0.27 beats analyst view $0.23

* Cites cost cutting

* Warns sub growth slowed in March and April

* Shares up 6 pct (Adds exec and analyst quotes, background, byline)

By Yinka Adegoke

NEW YORK, April 30 (Reuters) - Comcast Corp (CMCSA.O) posted a higher-than-expected profit increase as it added more subscribers and kept costs under control, the second U.S. cable company to prove surprisingly resilient in the face of the weak economy.

Comcast, the largest U.S. cable TV operator, said on Thursday growth in the first quarter had been helped by the U.S.-government-mandated digital TV transition, echoing comments by No. 2 cable service Time Warner Cable Inc (TWC.N) a day earlier.

Analysts said the pay-TV market is expanding as cable companies offer low-priced packages to Americans who had previously only watched television on free over-the-air broadcasts. The mandatory digital TV transition had been scheduled for Feb. 17 before being delayed to June 12.

"We also expect to see some benefit in the second quarter around the June digital transition date," Comcast Chief Financial Officer Michael Angelakis said on a conference call.

Shares of Comcast rose 5 percent to $16.00 while Time Warner Cable shares rose 4.7 percent to $32.59.

Comcast's customer additions were led by 329,000 new high-speed Internet subscribers as well as 288,000 digital video subscribers. Analysts at Credit Suisse had forecast Comcast to add 257,000 Internet subscribers and 282,000 digital video subscribers.

The company also added 298,000 phone subscribers. It lost 78,000 basic video subscribers, but that was smaller than Credit Suisse's forecast of a loss of 170,000 subscribers.

Collins Stewart analysts estimate U.S. cable, satellite and phone companies will add around 600,000 TV subscribers in the first quarter, compared with the depressed levels of 328,000 in the fourth quarter of last year.

"It's a willingness by former over-the-air customers to pay for TV and possibly a little bit more housing movement," said Thomas Eagan, analyst at Collins Stewart.

SLOWER MARCH AND APRIL

But Comcast executives were not certain whether the boost seen in January and February would last.

Angelakis and Chief Operating Officer Steve Burke both warned that they had seen a slowdown in subscriber growth in March and April, and that advertising sales remain down with few signs of a near-term recovery.

"I do think it's fair to say January and February and maybe the beginning of March we were feeling better, and then March and April have been slower," said Burke, who described the last few weeks as "tougher."

Comcast's net profit rose to $772 million, or 27 cents a share, from $732 million, or 24 cents a share, a year earlier. Revenue rose 5 percent to $8.84 billion.

Analysts, on average, had forecast profit of 23 cents on revenue of $8.76 billion, according to Reuters Estimates, on expectations that weaker consumer spending due to the U.S. recession would hurt pay-TV companies.

Free cash flow -- a measure of cash left after all expenses are paid for the quarter -- nearly doubled to $1.4 billion, driven by lower capital expenditures as subscriber growth slowed relative to last year.

"Like Time Warner Cable, Comcast had a re-acceleration of subscriber growth and free cash flow," said Chris Marangi, an analyst with Gabelli & Co, which holds Comcast shares. "It appears the pie is growing." (Reporting by Yinka Adegoke; Editing by Brian Moss)