(Reuters) - Comcast Corp on Thursday reported a quarterly profit that beat Wall Street estimates as it added more high-speed internet customers, part of a push to diversify away from the shrinking U.S. pay-TV market.
Comcast, which dropped its pursuit of Twenty-First Century Fox Inc’s entertainment assets last week after a bidding war with Walt Disney Co, is still in the hunt to acquire a controlling stake in European pay-TV company Sky PLC to expand internationally.
Shares of Comcast were up 3.7 percent to $34.66 in morning trading after the results.
Chief Executive Brian Roberts told investors on a conference call that Comcast walked away from its bid for the Fox assets because it could not justify the escalating price.
Sky posted double-digit earnings growth earlier on Thursday as it added another 500,000 customers, underscoring why Comcast is battling Fox to acquire a majority stake in the company.
Comcast’s revenue from high-speed internet customers rose 9.3 percent to $4.26 billion during the second quarter as it added 260,000 internet subscribers, above the average estimate of 200,000 from analysts at MoffettNathanson and Macquarie.
Comcast said it has increased its marketing for internet-only subscribers, since internet has higher profit margins than cable, which are diminished by TV programming costs.
The growth in internet connections is “more than offsetting the pressure on video and the outlook for the second half of the year is strong,” said Kevin Roe, an analyst at Roe Equity Research.
Comcast, the biggest U.S. cable provider, shed 140,000 video customers during the quarter, up from 34,000 customers in the prior-year quarter, as TV viewers opt for cheaper streaming options, such as AT&T Inc’s newly launched WatchTV at $15.
While streaming platforms will continue to pressure Comcast’s cable TV business, it will increase demand for high-speed broadband, said Roberts.
Net income attributable to Comcast rose 27.6 percent to $3.2 billion, or 69 cents per share, from $2.5 billion, or 52 cents per share, a year earlier.
Excluding adjustments, Comcast earned 65 cents per share, up from 52 cents per share last year, beating analyst estimates of 60 cents per share, according to Thomson Reuters data.
Comcast’s revenue rose 2.1 percent from the previous year to $21.7 billion but fell short of analyst estimates of $21.86 billion.
Revenue from NBCUniversal was flat year on year, because of a revenue decline for its movie studios, as hit movie “Jurassic World: Fallen Kingdom” opened late in the quarter.
Reporting by Sheila Dang; Additional reporting by Munsif Vengattil in Bengaluru; Editing by James Dalgleish and Steve Orlofsky