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Comcast Says It's Ahead of Plan on AT&T Cable Recovery

Firm sharply reduces its quarterly loss, partly by cutting the unit's costs and subscriber turnover.

August 01, 2003|Sallie Hofmeister | Times Staff Writer

Comcast Corp. said Thursday that it was well ahead of schedule for turning around the troubled AT&T Broadband cable properties it bought last November.

The nation's largest cable operator sharply narrowed its second-quarter loss by reducing subscriber turnover at the AT&T cable systems, cutting costs and improving other benchmarks, such as cash flow and profit margins.

Comcast, which has 21.4 million subscribers, reduced its net loss in the second quarter to $22 million, or 1 cent a share, from $210 million, or 22 cents, in the same quarter a year earlier. Revenue rose 10%, to $5.69 billion, adjusted for the AT&T acquisition. The company also raised its forecast for subscriber growth for the year.

Chief Executive Brian Roberts told analysts the company added 12,100 subscribers in the second quarter -- the first gain ever. The improvement is impressive because the quarter typically is a difficult one. College students terminate their service for the summer and more families move at the end of the school year. The gains reverse the average 120,000 subscribers that AT&T lost per quarter last year.

Another key reason for the improved financial picture was that the company has laid off 7,000 employees and contract workers since last November, 2,000 more than planned.

"We thought it would take three years to get this kind of cash flow improvement," Roberts said. "We are thrilled."

Roberts would not comment on the Philadelphia-based firm's widely reported interest in Vivendi Universal's U.S. entertainment assets. But he did not rule out possible acquisitions even as Comcast reduces debt, which totaled $26.7 billion at the end of the quarter.

"With the tremendous success companies have had building content assets, we should be looking for ways to improve the company's prospects," Roberts said. "We've shown discipline as a buyer and a seller."

Comcast already owns several cable channels, including E! Entertainment Television and the Golf Channel. It recently agreed to sell its controlling stake in QVC to Liberty Media Corp. for $7.9 billion -- a 37% annual compound rate of return on its initial $383-million investment, according to Roberts.

Comcast Class A shares fell 34 cents to $30.48 on Nasdaq. They have risen 29% this year.

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