Washington, D.C. (May 2, 2013)
In October 2008, Multichannel News' Ted Hearn reported that
Comcast had 25.1 million video subscribers, or 25.7 percent of
the entire pay TV audience.
That was so long ago that Hearn has left trade journalism and is
now the vice president of communications for the American Cable
Association. And Comcast now has just 21.9 million video subs, a
distressing decline of 3.2 million in four years plus. Not only
that, Comcast has yet to enjoy a financial quarter of video sub
gains since Mr. Hearn put his pen to paper in 2008.
The cable operator has worked hard to stem the tide, reporting
in the fourth quarter of 2012 that it lost just 7,000 video
subscribers, its best result in years. So industry observers
yesterday were anxious to hear how Comcast did when it released
its 2013 first quarter report.
Well, the nation's largest cable operator lost an additional 60,000
video subs, which marked an end to decreasing losses because it
lost just 37,000 video customers in the first quarter of 2012.
Comcast executives yesterday seemed a bit embarrassed when they
faced questions from Wall Street analysts on why the losses
continue. In fact, they might have been so embarrassed that they
offered what appeared in this reporter's view to be a most
illogical and confusing explanation.
Company CFO Michael
suggested to the analysts that the timing of monthly rate
increases could have been a factor. The cable operator notified
subscribers in the first quarter that the cost of some
programming packages would soon rise.
the first quarter, we lost 60,000
video customers, compared to a loss
of 37,000 in last year’s first
quarter. During the quarter, we
accelerated the timing of rate
adjustments and implemented
increases to 72 percent of our
customer base versus 62 percent in
the first quarter of 2012,"
But then the company's chief
financial officer went deep into the
weeds to further explain the video
"About half of our video subscriber
losses were due to the methodology
we use to count [MDU] subscribers
under our bulk contracts and the
other half were primarily video-only
customers," he said. "As you may
know, we count video customers that
are billed under bulk contracts on
an FCC equivalent or (EVU) basis,
which results in fewer customers as
rates increase. In order to improve
our transparency in how we report
and manage these bulk contracts,
we’ll be changing our external
reporting to a billable units
methodology at the end of the year.
We believe this change will
reinforce our operational focus in
this customer segment, and align our
video customer account methodology
with the rest of the cable
If you do, tell me what it means.
Okay, I'm being sarcastic.
Basically, Angelakis is saying that
much of the blame for the first
quarter losses can be attributed to
a "account methodology" for counting
bulk subscribers that somehow is not
'aligned' with 'the rest of the
He would have us believe that
Comcast, which has been desperately
trying to show the industry that it
has stopped video subscribers from
leaving, continued to use an
accounting process that was destined
to report that more video
subscribers did indeed leave in the
Does that make sense to you?
Wouldn't Comcast change this
accounting procedure before the
first quarter to ensure a more
positive result when so many
industry officials and investors
were looking for one?
Sorry, I have to conclude that
Comcast yesterday tried to create a
double-talk smokescreen to thwart
tough questions about the continuing
Deutsche Bank analyst Doug
Mitchelson later quizzed about
Angelakis about the counting of bulk
video subscribers and how it might
have affected the overall total.
To his credit, Angelakis chose to
respond by talking about the rate
increases, rather than the bulk
counting methodology. But at
this point, you have to question
that reason, too. The CFO said that
in the first quarter of 2012, 62
percent of subscribers were alerted
to an upcoming rate increase,
compared to 72 percent in 2013.
That's about a 15 percent increase.
However, the actual number of video
losses in the first quarter of 2013
compared to 2012 was roughly 62
So the rate increase doesn't explain
Bottom line: Comcast still has a
major problem keeping current video
subscribers and attracting new ones.
And any amount of industry-speak and
double-talk won't change that.