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Comcast Profit Jumps 28.6% on Growth of Broadband

July 31, 2013 by

In the second quarter — Comcast’s first full quarter owning 100 percent of NBCUniversal, in which it had previously held a 51 percent stake — earnings rose to $1.7 billion, or 65 cents a share, from $1.35 billion, or 50 cents a share, in the period a year earlier. Wall Street analysts had been expecting earnings of 63 cents a share.

Total revenue rose 7 percent, to $16.3 billion, from the second quarter of 2012, lifted by the continued growth of the company’s broadband Internet and business products. Free cash flow increased 25 percent, to $1.9 billion. Comcast was the first major television and Internet provider to report quarterly earnings, so its healthy results may augur more good news when others report in the weeks to come.

It is broadband, not cable television, that is generally bolstering cable companies’ results these days, because nearly nine out of 10 American households already subscribe to some sort of TV, but only two-thirds subscribe to broadband. Comcast gained 187,000 new broadband subscribers in the second quarter.

Comcast has been losing TV subscribers to DirecTV and Verizon FiOS for years. It lost another 159,000 in the second quarter, but the rate of loss has slowed lately. The company squeezed a 2.7 percent revenue gain from its television business, largely through rates increases and subscribers who chose more expensive packages.

Its revenue gain on the broadband side, however, was 8 percent.

“Cable had outstanding growth, particularly in high-speed Internet, and NBCUniversal had strong performance across all of its businesses,” Brian L. Roberts, the chief executive of Comcast, said in a statement. He credited the company’s “focus on delivering innovative products and a superior customer experience is driving our success, including stronger video, voice and business services results in cable.”

At midday, Comcast stock was up more than 5 percent, passing the $45 and nearing a record high.

Mike McCormack, a media analyst for Nomura, said in a note to investors that NBCUniversal’s performance also exceeded expectations, “with filmed entertainment and broadcast television revenue offsetting weaker-than-expected theme parks revenue.”

NBC’s cable channels, including USA, Syfy and Bravo, posted a 7.7 percent increase in revenue, to $2.41 billion in the quarter, while its somewhat smaller broadcast business, which has been in a rebuilding mode, had a 11.6 percent bump, to $1.73 billion. Mr. McCormack attributed the broadcast unit’s gains to “better ratings and higher retransmission consent fees.”

With regards to the ratings, Comcast executives credited “The Voice,” the singing competition on NBC that has given the network some much-needed momentum.

Over all at NBCUniversal, revenue was up 8.9 percent year-over-year, to almost $6 billion.

This article has been revised to reflect the following correction:

Correction: July 31, 2013

Because of a rounding error, an earlier version of the headline with this article misstated the increase in earnings for Comcast. Earnings increased 28.6 percent, not 26 percent, in the second quarter.

Article source: http://www.nytimes.com/2013/08/01/business/media/comcast-profit-jumps-26-on-growth-of-broadband.html?partner=rss&emc=rss

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The Media Equation: Barry Diller’s Aereo Service Challenges Cable Television

March 17, 2013 by Leave a Comment

The table in the conference room on the sixth floor of the IAC headquarters in Manhattan was a portrait of organization. In front of each of the 10 chairs was a leather case holding a fresh tablet of paper, with a sharpened pencil placed above it, just so. Everything in “the Helm,” as they call the room, was precise, orderly, logical. Just the way Barry Diller likes it.

Ten days ago Mr. Diller, the chairman of IAC/InterActiveCorp, was sitting at the head of that table talking about Aereo, a start-up in New York that he is backing. Aereo uses antenna farms to capture broadcast signals that can then be streamed on the Internet and viewed on a device of the customer’s choosing. Given that the service cuts out the cable television middleman and pays no retransmission fees to the programming producers, it’s a business idea that will sow chaos, disruption and turmoil. Just the way Mr. Diller likes it.

Mr. Diller has lived through various paradigm shifts in the television business. Indeed, he has helped create some of them. He worked as a young man at ABC, rose to head Paramount Pictures while inventing the made-for-television movie, helped make shopping a televised activity, and, most famously, created a fourth network at Fox.

A chronic deal maker and financial engineer who has aggregated a number of Web-oriented businesses at IAC, including Match.com, CollegeHumor, The Daily Beast and Vimeo, he has made many friends and enemies along the way — and in Mr. Diller’s world, it’s often difficult to tell them apart.

Aereo gained a big legal victory last summer when a judge declined to issue an injunction against it. The plaintiffs have appealed to the United States Court of Appeals for the Second Circuit. Oral arguments were given in November and a decision is expected in the coming months, but Aereo and its backers are not content to wait. The company is about to roll out its service in 22 American cities, aiming a missile at the heart of the television business.

Aereo is what has been called a loophole start-up because it is structured to comply with regulations even as it disrupts the current model. The company was started by Chet Kanojia, a Boston technologist and entrepreneur, and became operational in New York last year. It is built on a relatively ancient technology, with coin-size antennas assigned to each person in the coverage area who signs up for the service. Customers can then use an Internet connection to stream any program from broadcast stations, or have them stored by Aereo for later streaming.

“I met with Chet Kanojia and spent an hour challenging him and understanding the technology, and I couldn’t find a flaw,” Mr. Diller said. “I knew there was going to be controversy, but I couldn’t find a flaw because I felt that the existing law was so much on the side of what Aereo was doing, and that’s what intrigued me.”

Having watched Mr. Diller on and off for over a decade, I suggested he was enjoying the opportunity to roll a grenade into businesses run by people whom he might otherwise invite to his home for cocktails — people like Leslie Moonves of CBS and Rupert Murdoch, for whom he built out Fox Broadcasting.

“That’s not right,” he said. “In this environment, your friends really are your enemies. Anything you’re going to do more than likely disrupts somebody’s business. There’s no grenade thrill in it.”

He added: “I am very fond of Les Moonves, and he is a terrific executive. Les said to me: ‘Look, I have no objection to what you’re doing. Just pay me retransmission fees and you can go in good health.’ I said, ‘When you can get Radio Shack’ ” — which sells antennas — “ ‘to pay you retransmission fees, I’ll be right behind them.’ ”

In a phone call, Mr. Moonves reciprocated Mr. Diller’s nice words but maintained resolutely that Aereo was a lawless technology.

“It is clear that the whole premise of Aereo is to make money off the back of the hundreds of millions of dollars we invest in programming,” he said. “We pay the N.F.L. $1 billion a year. Right now we have a lot of correspondents in Rome. We think it is patently illegal to take our signal and those of the other networks and resell it without paying for it. It is so wrong on so many different levels.”

In our conversation, Mr. Diller anticipated Mr. Moonves’s response.

E-mail: carr@nytimes.com;

Twitter: @carr2n

Article source: http://www.nytimes.com/2013/03/18/business/media/barry-dillers-aereo-service-challenges-cable-television.html?partner=rss&emc=rss

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Sony to Cease Its Flat-Screen Partnership With Samsung

December 27, 2011 by Leave a Comment

Sony, which makes the Bravia liquid-crystal-display televisions, said in a statement that it would sell its stake of nearly 50 percent in the jointly owned manufacturer, S-LCD, to Samsung, of South Korea, for 1.08 trillion won, or $935 million.

Sony’s exit from the joint venture, which was set up in Tangjeong, South Korea, in April 2004, will let it switch to less-expensive outsourcing options that may help it to resuscitate its struggling television business. The only other LCD panels Sony manufactures are through its joint venture with Sharp, in which Sony owns a 7 percent stake.

Cutthroat competition in a peaking market is squeezing profit margins for TV manufacturers, especially Sony, which analysts have long criticized for its high production costs. A strong yen has also weighed on Sony’s profit by eroding the value of its overseas earnings when they are repatriated into yen.

Last month, Sony warned that it would lose money for its fourth consecutive fiscal year, which ends next March. Sony’s television unit alone accounts for billions of yen in losses.

The company said it would report a further write-down of 66 billion yen, or about $845 million, for the final three months of 2011 because of its exit from the Samsung joint venture. But it expected to cut costs in its LCD business by 50 billion yen a year as a result of the departure, Sony said.

Sony “aims to secure a flexible and steady supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility,” it said in the statement.

Meanwhile, Samsung Electronics, the world leader in flat-panel televisions, would gain freer rein in producing its next-generation displays by taking control of S-LCD. Samsung said in a regulatory filing that its board had approved the plan Monday.

The roots of the Sony-Samsung alliance date from the late 1990s, when Samsung emerged from the Asian financial crisis as a powerhouse because of relentless cost-cutting and aggressive overseas marketing.

At the same time, Sony was falling behind in several important markets, most notably in computer displays and flat-panel TVs, where it clung to the older technology of cathode ray tubes while consumers flocked to LCDs and plasma screens.

Sony looked to Samsung to reverse its flagging fortunes, forging a series of deals, including the $2 billion state-of-the-art LCD joint venture in South Korea. The companies also together backed the Blu-ray disc format and have entered into patent-sharing relationships.

For Samsung, those deals stood as an acknowledgment of its emergence as a global player. It has now taken over from Sony as the consumer electronics king. In its latest full financial year, Samsung earned $14 billion on sales of more than $134 billion, while Sony lost $3 billion on sales of $92 billion.

In comparison, Apple, the most profitable consumer electronics company in the world, generated $25.9 billion on sales of $108 billion.

Article source: http://feeds.nytimes.com/click.phdo?i=9b248431df6ea4f2e25b2fba3cb43ba8

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Mounting Woes Prompt Sony to Predict Another Annual Loss

November 2, 2011 by Leave a Comment

TOKYO — A strong yen, flooding in Thailand and tepid sales in the United States and Europe all conspired to knock Sony to a net loss for the latest quarter, putting the company on course for a fourth unprofitable year in a row.

The Japanese electronics and entertainment giant said Wednesday that it expected to post a net loss for the financial year ending next March of ¥90 billion, or $1.2 billion, compared with a previous forecast of ¥60 billion in net profit. Sony booked a net loss of ¥27 billion for the quarter through September, compared with a profit of ¥31.1 billion a year earlier. Sales in the quarter fell 9 percent from a year earlier to ¥1.58 trillion.

The somber numbers put pressure on Howard Stringer, the Welsh-born American chief executive who is in his seventh year at Sony’s helm, to take more drastic measures to turn around the manufacturer or hand over the reins to someone who can.

Mr. Stringer, 69, had suggested that he would lay the foundations for a strong recovery at Sony, equipping it to put up a better fight against rivals like Apple and Samsung before leaving the company in the hands of a younger successor. But with its bottom line decimated by the global financial crisis and then more recent problems, the handover could be a messier affair.

Sony has, in fact, been making progress in restructuring its sprawling empire, shuttering some factories and paring down its supply chain. It said last week that it would spend €1.05 billion, or $1.5 billion, to take full control of its struggling cellphone venture with Ericsson of Sweden, and announced plans to realign its money-losing television business.

Kazuo Hirai, an executive vice president considered to be a strong contender to succeed Mr. Stringer, offered more details Wednesday of Sony’s plan to turn around its television operations, saying it would incur costs of ¥50 billion to streamline production and other fixed costs. Sony will also reduce the number of television models it offers, said Mr. Hirai, who leads the company’s consumer electronics business.

“The entire Sony management feels a grave sense of crisis that we have continued to post losses in TVs,” Mr. Hirai, 50, said at a news conference. “We urgently want to escape this chronic loss-making state,” he said.

But 2011 has been a painful year for Sony, with much of its troubles caused by misfortune. It was forced to halt production at 10 factories in the aftermath of Japan’s earthquake and tsunami in March, including a Blu-ray disc plant completely overrun by waves. A few weeks later, a massive computer hacking attack that compromised more than 100 million accounts on the PlayStation Network exposed embarrassing weaknesses in the company’s online defenses, forcing the company to shutter the popular video game service for more than a month.

In August, rioters in Britain set fire to a north London warehouse containing CDs and DVDs, burning it to the ground. More recently, devastating floods in Thailand submerged a digital camera factory and forced Sony to halt production at a semiconductor plant because of supply shortages.

All the while, the punishing strength of the yen against the dollar and euro has weighed on Sony’s earnings, making its products less competitive globally and eroding its overseas earnings. The yen soared to a post-World War II record earlier this week, prompting the Japanese government to intervene in currency markets to try to tame its rise.

Sony has also long had its hands tied in trimming its global work force of almost 170,000. A third of those employees are in Japan, where large-scale layoffs by top companies are highly controversial.

“We are fighting against strong headwinds,” said Masaru Kato, the chief financial officer of Sony.

Those woes have hindered what Mr. Stringer has called Sony’s “four-screen strategy,” centered on its smartphones, tablet computers, personal computers and televisions. The idea, according to Mr. Stringer, is to bring content from Sony’s music and movie companies exclusively to those gadgets, spurring both hardware and software sales.

Article source: http://feeds.nytimes.com/click.phdo?i=07acb7101d227af973b48c8fbba500ad

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