Comcast: We’ll Win Back Lost Subs9/12/2004 8:00 PM Eastern
A Comcast Corp. senior executive declared last Wednesday that the No. 1 MSO will win back the 96,000 basic subscribers it lost in the second quarter, but not through drastic measures.
Comcast was hit hard in the second quarter after reporting greater than expected basic-subscriber losses. Most analysts had anticipated basic customer losses in the 50,000 range.
At the Morgan Stanley Media & Communications conference in Washington, D.C., co-chief financial officer John Alchin said that in the seasonally weak second quarter — when students go home and snowbirds fly north — Comcast had expected a basic-customer decline of 50,000 and 75,000.
“We had 25,000 to 50,000 more a net loss than perhaps we should have. Did that come from more aggressive advertising from the satellite providers? Did that come as a result of we were still winding up the last bit of our rebuild? It’s too early to tell,” Alchin said.
“But what I would argue is that having 25,000 more disconnects than we should have had on a base of 21.5 million subscribers is absolutely negligible. And there is nothing in our business plan that anticipates going forward losing on an annual basis subs out of our basic subscriber base. We think there is a rock-solid base there.”
Alchin predicted that at least 200,000 new customers in the second half of the year would come directly from satellite competitors.
They’ll be lured by advanced services like video-on-demand and HDTV, not by dish buybacks or long-term price cuts, he said. Alchin also said Comcast would resist lowering prices for high-speed Internet connections, as digital subscriber line competitors have.
“We have not been in the business of racing down the slippery slide of discounting as our competitors have shown a propensity to discount some of these new products — and I’m thinking obviously of DSL,” Alchin said. “We held firm last year, we held firm through this year.”
Instead, Comcast has focused on making the service more attractive, doubling the basic download speed to 3 Megabits per second and adding a 4 Mbps tier that includes home-networking functions and more content.
“We are loading up this package with a lot of value and a lot of differentiation, to make sure we’re not just competing on price,” Alchin said.
He also addressed potential customer acquisitions. Comcast is expected to take a look at Adelphia Communications Corp. properties now on the block. But Alchin said that’s not a top priority. He said there are some attractive properties but Comcast won’t pay top dollar for any of them.
“We don’t need to gain any more scale and scope,” Alchin said. “We can be the most disciplined buyer out there. There are certainly properties in the Adelphia portfolio that fit nicely with what we have, but there is nothing there that we have to have. We can look at these properties and make a very analytical, objective decision about whether or not we will be a player.”
Alchin lamented Comcast’s low stock price, which has lagged along with the rest of the industry, and said he’s puzzled, especially when Comcast has performed well.
For example, Comcast programming cost increases rose only 5% to 6% this year and the company’s on track to report more than $1 billion in advertising revenue in 2004 and increased leverage with vendors.