This'll be a two-for-the-price-of-one offering for my Foolish friends. Cable-industry leader Comcast
Somewhat surprisingly, Burke, who almost by definition is closer to the day-to-day nuts and bolts of Comcast operations, took a more top-down, philosophical look at Comcast, while Roberts provided a more quantitative look at the company's products. In fact, Burke began with what, to me, a nearly decade-long observer of cable, seems to be one of the major conundrums for the industry: "...It seems like investors are always looking at the negatives."
Why so negative?
He continued on, noting that, in his nearly a decade with the company, he's watched those negatives travel from the specter of satellite competition to the potentially negative effects of the Internet ("If we didn't have the Internet, we would not have 13 million people paying us $500 a year"), to the latest concerns about the telecoms' triple-play offerings. But he concluded, "When you boil it altogether, there are very few [companies] that can consistently grow double digit the way we have."
I also viewed Burke's discussion of seasonality at Comcast as vital to an understanding of the company and its progress. Indeed, more than a few analysts were disappointed by the pace of revenue generating unit (RGU) growth in the June quarter, where one RGU equals a single customer taking one service. But it seems to me those forlorn dart throwers should have known better. As Burke explained, "If you go back as far as the eye can see, the first and fourth quarters are typically the best to cable quarters, the second is the worst, and the third is better than the second."
Roberts, however, was a front of quantification. The man who leads the largest company in an industry that includes Cablevision
He also observed that the company has 53 million subscriptions -- RGUs -- today, with the breakdown being "24 million basic cable, 14 million digital, 13 million data, 3 million phone." If, as he expects, Comcast can continue to add RGUs at the rate of up to seven million a year, that growth will fuel revenue growth and, therefore, propel cash flows.
Looking at the specific products, Roberts is obviously high on the company's video products. With the launch several years ago of their on-demand product, followed by the digital video recorder (DVR) and high-definition reception, the company has been able to add about two million digital customers, along with an equal number who take the high definition-DVR combination.
In on-demand offerings, the company recently passed a milestone when it offered 10,000 video-on-demand (VOD) programs in a month. In part as a result, the major broadcasters are using VOD as an opportunity rather than as competition, and they're cutting deals through which they're able to promote their own programming via the on-demand offering.
Regarding movie offerings, the company is in "day-and-date" trials in Pittsburgh and Denver of offering films on-demand as they're cleared for DVD. As Roberts notes, "We see this as a big technological shift in advantaging our cable business."
Comcast Digital Voice, the company's telephone product and growth engine, is expected to add about 2.5 million subscribers this year. Comcast is also looking to target small businesses, where Roberts believes Comcast can capture about 20% of a $12 million-$15 million market during just the next five years.
Finally, with advertising having slowed appreciably for the cable operators (as has been the case largely across the board among media companies), Roberts sees a big push in interactive advertising. As he says, "Cable will aggregate the most eyeballs, and therefore has the best potential in interactive advertising of any platform out there."
So there you have it. A rare big media company that's on the grow, benefiting from the components of its two-year-old triple play, moving into other interactive areas, and expanding its programming group. As Burke said, " Of all the time that I've been with the company, we are as comfortable with our asset mix now as we have ever have been."
Comcast isn't without its competition. But with its steady growth, along with its expanding bank of on-demand programming and its cable networks, this appears to be a company well-positioned for continued expansion.
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