Comcast Corp (CMCSA.O) posted a better-than-expected rise in quarterly profit driven by strong subscriber additions, though it was tempered by weak performances at its NBC Universal broadcast and movie units.
Shares were up 5 percent in morning trading on Wednesday, hitting a new 52-week high, as the company also announced a 44 percent increase in its quarterly dividend and a new $6.5 billion share buyback.
The leading U.S. cable TV provider added 336,000 Internet subscribers and lost just 17,000 video customers -- its best quarterly video numbers in five years.
Analysts at Collins Stewart had expected Comcast to add 242,000 Internet subscribers and lose as many as 140,000 video subscribers.
"I really believe these improvements are sustainable because they are the result of our scale and our intensified focus on service and innovation," said Comcast Chief Executive Brian Roberts on a conference call with analysts.
U.S. cable companies have been losing traditional video subscribers at an increasing rate over the last five years and have been relying mainly on Internet and phone additions for subscriber growth. The cable industry has been hit by a triple whammy of a weak housing market, stiffer competition from satellite TV and phone companies and cheaper entertainment alternatives from Web video services like Netflix Inc (NFLX.O).
Cable executives have disputed that they are losing customers to online video services in a phenomenon known as "cord-cutting," which is expected to see new entrants from Amazon.com Inc (AMZN.O) and Google Inc (GOOG.O). Comcast and Time Warner Cable Inc TWC.N have led a push to expand their programming agreements to include Web access so customers can see their shows wherever they are, and on most devices.
"We may not get back to full growth in video for a while because we don't see housing growth, but someday that's going to happen," said Roberts.
Comcast also added 146,000 phone customers, below Collins Stewart's forecast of 170,000 additions.
"I thought these were pretty strong results," said Collins Stewart analyst Thomas Eagan. "They could possibly grow video subscribers in the current quarter. We think this reflects better overall execution across the cable business."
Comcast, which took control of NBC Universal a year ago, said strong cash flow growth at its cable networks was offset by a weaker performance at the NBC broadcast business and its Universal studio.
Cable networks, including USA, Bravo and E!, saw operating cash flow jump 16.2 percent to $930 million, but NBC cash flow turned negative at $52 million. Universal's operating cash flow nearly halved to $91 million. The theme park business posted flat operating cash flow performance at $191 million.
Comcast is doing well in spite of NBC Universal's weaker performance, said Bernstein Research analyst Craig Moffett in a note to clients.
"Comcast remains a distribution company, not a media company, and by a huge margin. NBCU, in other words, just needs to stay out of the way."
Fourth-quarter net income rose to $1.29 billion, or 47 cents a share from $1.02 billion, or 36 cents a share, a year before.
Analysts had on average forecast profit of 41 cents per share, according to a poll by Thomson Reuters I/B/E/S.
Revenue rose 3 percent to $15 billion.
The cable company raised its dividend by 44 percent to 16.25 cents a quarter, or 65 cents a year, and announced a new share buyback program of $6.5 billion, with a pledge to spend $3 billion in 2012. Analysts said they had been expecting Comcast to buy back around $3.5 billion in stock in 2012.
Comcast is the latest media company to announce a major buyback and dividend increase at the start of the year. Viacom Inc (VIAB.O), Time Warner Inc (TWX.N) and Walt Disney Co (DIS.N) all have put more focus on returning cash to shareholders for 2012 rather than on major acquisitions or capital intensive projects.
Comcast shares rose by $1.36 to $28.61 in late-morning trade on Nasdaq.
(Reporting By Yinka Adegoke; Editing by Gerald E. McCormick)