Comcast Stock: It Gets Worse

Comcast (NASDAQ: CMCSA  ) (UNKNOWN: CMCSK.DL  ) stock moved higher on Wednesday after posting well-received quarterly results. Revenue, earnings, and free cash flow all moved higher. However, a problematic nugget in Comcast's report is that video customers continue to cut the cord.

Comcast closed out the first quarter with 60,000 fewer cable television customers than it started with. It's lost 359,000 video customers over the past year.

It's not just Comcast. Traditional cable providers continue to suffer net defections. Time Warner Cable (UNKNOWN: TWC.DL  ) shed 119,000 video subscribers during the first quarter of the year. Cablevision (UNKNOWN: CVC.DL  ) reports quarterly results in a few days, but it did shake 53,000 video customers through 2012.

Comcast stock has been ignoring the trend, hitting a fresh all-time high last month. Bulls will argue that the company has diversified its business dramatically with the NBCUniversal acquisition. Cable providers have also been able to grow their Internet access and broadband phone services to offset the decline in video customers, but those bundling gains can't go on forever.

In this video, longtime Fool contributor Rick Munarriz argues that Comcast stock is cruising for a bruising. Comcast may be proud that its video customer is now paying an average of $155 a month -- up 8% over the past year -- but this also means that they will eventually get fed up at a time when there are so many viable options.

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  • Report this Comment On May 03, 2013, at 7:07 PM, srikanth1048 wrote:

    want to correct a mistake in the Article it mentioned that "Comcast may be proud that its video customer is now paying an average of $155 a month" 155$ mentioned in last wednesday's call is ARPU per customer & this is the total for 3 months in that quarter & not revenue for each month where Comcast currently has app. 52 million combined all customers & this leads to anywhere around ~7.5-8Billion Revenue leaving the Ads & Other Business services whcih seem to yielded another ~2 Billion resulting in TOtal Comcast Cable revenue of 10+ Billion & not counting the NBC universal renue.

  • Report this Comment On May 03, 2013, at 7:15 PM, MUSCLE13 wrote:

    Poor reporting Rick. Your video missed over the growth in broadband subs, the growth in voice subs and the growth in business subs which are growing at a pace of over 30% per year, Not to mention the new home automation and home security business.Comcast added over half a million net subs in the quarter.

    You also completely ignored NBC network, Telemundo, the highly profitable cable networks, the accelerated growth at the Universal theme parks, and the movie studio profits. Comcast is one of the largest media content providers in the world with extensive revenue in retransmission, licensing and advertising.

    At about 7 times EV/EBITDA, it is hard to find a more cheaply valued media company. Especially one that has such an extensive stock buyback and dividend plan.

    I am actually surprised at such narrow and poor reporting Rick.

  • Report this Comment On May 04, 2013, at 7:24 AM, MUSCLE13 wrote:

    On the question of video subs Rick. Have you considered

    1. That Comcast reduced the loss of video subs last year as compared to the previous year.

    2. The rollout of the X1 cloud platform this year.

    3. The impact of a housing recovery on video sub numbers over the next few years.

    I would like to read your take on all 3 questions.

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