Can Comcast Cope with All the Cable Cord-Cutters?

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Can Comcast Cope with All the Cable Cord-Cutters?Don't look now, but the cord-cutting trend continues for Comcast (CMCSA).

Things might appear peachy at the country's largest cable provider based on Wednesday morning's quarterly report. Revenue soared 51%, and free cash flow climbed 36% higher. However, these figures are inflated given the NBCUniversal deal that had yet to be completed a year ago. Lump it all together to arrive at more accurate pro forma results, and revenue clocks in just 5% higher during the period. Operating cash flow rose by a mere 3%.

It gets worse.

The real trouble spot here is buried several paragraphs deep in Comcast's report. It's there where investors will see that Comcast is down to just 22,360,000 video customers. That's 577,000 fewer than the 22,937,000 couch-potato homes it was servicing a year earlier.

This is a Comcastic problem, folks.

Anatomy of a Cord Cutter

Losing video customers isn't new for Comcast. It may have shed 165,000 net cable subscribers during the past three months -- and 443,000 year-to-date -- but the cord cutting has been happening for a long time. Comcast shed 757,000 net video accounts in 2010 after losing 623,000 customers in 2009.

Comcast and its investors aren't overly concerned. Video revenue has inched higher despite the defections as a result of fattening cable bills. Comcast is also growing its high-speed Internet and broadband telephone services, taking some of the sting out of the TV buff exodus.

This is still something that Comcast will need to address.

The popular theory has been that penny-pinching homes have been nixing their cable television subscriptions, turning to HDTV antennas for free access to local channels and using their WiFi connections to stream everything else.

Netflix's (NFLX) booming popularity over the past few years has fueled the notion that Netflix streaming is Comcast's biggest enemy, but that's no longer true. After its unpopular summertime rate increase, Netflix shed a whopping 800,000 domestic subscribers during the same three months that Comcast experienced 165,000 net cancellations.

Cheaper Video Killed the Video Star

The fact that Comcast's video revenue is growing while its video audience is shrinking should tip you off to the real problem here. Comcast is just too darn expensive, and folks are getting fed up with the perpetual rate increases.

Compare your latest cable bill -- if you haven't kicked your cable provider to the curb already -- with what you were paying a year or two ago. You'll be surprised at the slow creep that you never saw coming, quietly justified by your provider in adding new channels that you don't necessarily care for.

Cheaper television providers are holding up just fine. AT&T (T) U-verse gained 175,000 broadband television accounts during the same quarter, and a good chunk of that probably came from the 165,000 homes that Comcast lost. Cheaper satellite television and alternative providers have also been gaining ground. DIRECTV (DTV) -- while not necessarily cheaper than Comcast as the top dog in satellite television -- has been able to set itself apart with its exclusive NFL Sunday Ticket, which provides coverage of every football game.

So, yes, Comcast has a problem that the big numbers in this week's quarterly report can't disguise. It's fading as a cable provider, and that's not going to change unless it either gets cheaper or finds a way to make its escalating ransoms worth paying through proprietary content.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. Motley Fool newsletter services have recommended buying shares of Netflix.

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Bob

I can say that I did at one point I did have Comcast (or now known as Xfinity) until I couldn’t afford it due to the rising costs. I did try internet streaming services like Netflix and Hulu Plus, until I found that I was getting bored with the selection they had. I never thought about getting satellite service until I started working for DISH Network and realized how affordable the prices are with DISH. I may be biased in my opinion now but the fact that anyone (not just me) can get two TV’s, DVR, and HD for only $41 a month, sounds like a great deal to me because when I was with Comcast I was paying a little over $100 per month (ouch).

December 08 2011 at 1:09 PM Report abuse rate up rate down Reply
Don

I would to get Comcast cable, but they will not even return my calls or make attempt to get back in touch with me at all. I know they have cable near me, but I guess they just don't me as a customer.

November 16 2011 at 12:26 PM Report abuse rate up rate down Reply
Ray Ray

I met this Guy the other day he gave me his business card and told me to look at his online store front for all essential services, i Took the Card to be nice but I decided to LOOK and Wow i was amazed it was awesome. mediaone.acndirect.com I was able to ditch comcast and get better service thru direct, and got a special discount.it has alot of other services that he offered. Thank you Mike for the Card. MEDIAONE.ACNDIRECT.COM or MEDIAONE.ACNREP.COM. He brokers electric and natural gas thru the site to.


Thx for reading RR

November 11 2011 at 12:01 AM Report abuse rate up rate down Reply
B

I found the best product. Call 888.518.0180 if you want to cut your cable and get in control of tv. Its pretty sweet. Its called Axio TV. HDDVR, Local Channels, Video On Demand, no contracts, everything I need. Only $20 a month!!

November 08 2011 at 1:24 AM Report abuse rate up rate down Reply
Peg

what really sucks is when comcast started blocking torrent downloads, at least here in Memphis they did

November 07 2011 at 9:52 AM Report abuse rate up rate down Reply
cfre367256

Our HOA did away with comcast this year when our contract was up for renewal, and refused to negotiate. It worked out great for me. I put up an 8 bay UHF/VHF antenna a get from 57 to 64 channels. I pick up every station from Fort Pierce, Florida to Miami, Florida. My antenna, pole, and wiring ran me about the same as two months cable bill would have been after the HOA dropped them. Bye, Bye Comcast your company is fading fast. :)

November 06 2011 at 10:30 PM Report abuse rate up rate down Reply
Douglas

I am sick of the higher bills for Comcast each year. I bought myself a WD TV Live Hub which streams everthing from my computer to my TV. It also has many free media services and TV programs. I don't pay an extra penny for it all.

November 06 2011 at 7:24 PM Report abuse rate up rate down Reply
dickeringaround

Isn't it amazing that they add channels and think that is a good reason to raise prices? Hmmm I can only watch one program, on a tv at a time. Their addition of a new channel doesn't mean I will watch two. If I go to a movie theater, I only sit in one seat, watching one screen, even though there may be a dozen different lil boxes to sit in. So far, they haven't found a way to charge me for two movies. Oh Heck, I shouldn't have said that. Now someone will look into how.

November 05 2011 at 6:31 PM Report abuse rate up rate down Reply
Elaine

Comcast BITES!

November 05 2011 at 9:58 AM Report abuse rate up rate down Reply
iamannatude

P.S.:
I finally figured out how to really get back at the BIG boys! Now, I cant fight corporate, they have all the money and lawyers they need.
HOWEVER!
I can nickel and dime them with the best!
AGAIN, we had trouble with comcast, years ago, they made the mistake of telling me that the bill was added to and balanced DAILY! Oh, really!?!
SO! I started driving to their office DAILY and paid them their $1.85 DAILY! Their clerks thought this was a hoot! After about 2 months, one of the office big wigs called my hubby and begged him to get me to stop paying that way, as it was costing them DOUBLE our bill to do all the accounting (I insisted on an itemized bill)
Know what my hubby told them? "Maybe you need to get your customer service people to stop being so snotty, and then my wife wouldnt take you so literal (and take you to the cleaners as well)"
They actually LOST money by my doing it that way, but I can see they didnt really LEARN anything,lol!.

November 05 2011 at 2:12 AM Report abuse +2 rate up rate down Reply