The Big Picture

We want Comcast customers to be amazed by the choices we offer, excited by the innovation we provide and pleased with the service and reliability of their every interaction with us – we are making real, measurable progress in this area.

Video

We continue to focus on product differentiation – enhancing our video offerings with many new digital features to drive revenue growth.

  • More than 17 million or 70% of our video customers were digital customers as of December 31, 2008.
  • More than 7 million or 45% of our digital customers subscribed to advanced services like HD or DVR, generating average monthly revenue per customer of $80-$85.

On Demand

With 10,000 choices every month and even more on the way, On Demand is a strong differentiator for our video service.

All our digital video customers have access to On Demand, and customers watch on average 25 times a month. In 2008, we extended our On Demand offerings to include more than 1,000 HD choices, and we are currently working on a new architecture for On Demand called Project Infinity, which will allow us to offer the most On Demand content anywhere and on many different devices.

High-Speed Internet

With nearly 15 million customers, Comcast is the nation's largest provider of residential high-speed Internet services.

Our nearly 30% penetration rate for high-speed Internet allows us plenty of room for growth.

  • Revenue from our high-speed Internet services grew 10% in 2008 to $7.2 billion, representing 21% of total company revenue.
  • We retain the premium position in the market and continue to capture market share from DSL at an accelerating pace.
  • As we expand our deployment of Wideband from 30% of our markets to 65% by the end of 2009, we will continue to expand our cutting-edge speeds and competitive advantage.

Digital Voice

In just three years, Comcast Digital Voice has become the third largest residential phone service provider in the U.S., serving nearly 6.5 million customers.

  • The growth prospects for our digital voice business are very exciting since, even with our rapid growth, we only capture 14% of the available market today.
  • We believe we can capture 20%-25% penetration of the residential phone market over time.
  • Comcast is reinventing home phone service with innovative new features and integration with our video and high-speed Internet products.

Business Services

Business Services represents a significant opportunity and driver of growth for Comcast.

In 2008, we generated strong momentum and substantial growth in Business Services.

  • Comcast Business Services offers video, voice and Internet products to businesses at a terrific value – more for less.
  • Our goal is to build a highly profitable, multibillion-dollar revenue business that captures about 20% of the $12-$15 billion small and medium-sized business market in our footprint over the next few years.

A Powerful Network

With a powerful, high-capacity network in place, we're delivering superior services today and are well positioned for future innovation.

We have a high-capacity network in place, and we continue to optimize it for peak performance and future growth.

Each day, our network delivers:

  • 15 million On Demand views
  • 172 million Web page views
  • 76 million emails
  • 99 million phone calls
  • 2.9 million voice mails

And we're making it even more reliable. Driving peak performance from our 116,000 nodes:

  • node health is now above 90%
  • node health has improved 35% in the last two years

Other service improvements in 2008:

  • call center contact rates declined 4%
  • trouble call rates are down 6%
  • repeat trouble calls declined 7%

All-Digital and Wideband

We are moving aggressively to complete two key initiatives in the next 24 months to further extend our competitive advantage.

All-Digital

By the end of 2009, we plan to roll out All-Digital to markets that include more than half our customers.

  • With this effort, we will recapture bandwidth representing 50 to 60 analog channels per market and expect to drive improved efficiencies and strong financial returns.
  • For customers, All-Digital means better picture and sound quality, more HD channels, more HD On Demand choices and new targeted digital offerings, such as foreign language channels.

Wideband (DOCSIS 3.0)

We are evolving our network from broadband to Wideband as we begin to deploy DOCSIS 3.0, a technology that will allow us to use our existing network infrastructure to offer next-generation Internet speeds.

  • Wideband is already available in about 30% of our footprint, and we plan to make it available to 65% of our markets by the end of 2009.
  • We believe Wideband will spur innovation in new high-speed Internet features and further strengthen our leadership position in the market.

Investments and Acquisitions

Our disciplined investment and acquisition strategy is focused on extending our product leadership and competitive advantage.

We invested in Cable, Programming and Internet assets during 2008, including:

  • our transaction with Insight, which resulted in the addition of 696,000 video customers
  • the purchase of an additional ownership interest in Comcast SportsNet Bay Area
  • the acquisition of the remaining interest in G4 that we did not already own
  • the purchases of DailyCandy, Plaxo and Vehix

Also in 2008, we made a $1.05 billion investment in Clearwire, a spectrum-rich mobile broadband provider that is deploying a nationwide 4G wireless network. This investment provides Comcast with an opportunity to extend the reach of our broadband products beyond the home.

We're beginning to develop advertising opportunities for the next generation of television through our investment in Canoe Ventures.

  • The venture marks an industry-wide effort to increase cable's share of the approximately $300 billion U.S. advertising market.
  • With the cable industry's two-way TV platform, Canoe Ventures has the potential to provide advertisers with targeted access to viewers in nearly half of all U.S. TV households.

Profitable Growth

With diverse revenue streams, we have lots of room for growth.

  • Our programming division feeds the passions and interests of millions of consumers.
  • Our regional SportsNets are strong operating businesses with strategic value that capitalize on our local presence.
  • Comcast Interactive Media seeks to grow and extend our online businesses and create converged experiences for Comcast's customers.
  • Comcast Spectacor is a leading sports and entertainment company.

Capital Investment

Our capital investment strategy is disciplined and focused on returns.

In 2008, capital expenditures continued to be predominately growth-oriented, with growth Capex accounting for 71% of Cable Capex.

  • We added 2.6 million video, voice and high-speed Internet customers, and added or upgraded nearly 1.5 million digital video customers. We spent $1 billion or 18% of our total Cable Capex to deploy almost 2.2 million advanced set-top boxes.
  • As we make investments in customer premises equipment to support growth in new services for both our residential and commercial businesses, we are generating attractive incremental returns that substantially exceed our weighted average cost of capital.
  • In 2009, we expect total capital expenditures to decline both in absolute dollars and as a percentage of revenue, even as we take the opportunity to make investments in the key strategic initiatives of All-Digital and Wideband.

FCF Growth

We're focused on free cash flow and maintaining a disciplined and returns-oriented approach to allocating capital.

In 2008, free cash flow grew 56% to $3.7 billion as a result of solid operating cash flow growth of 8.5% coupled with lower capital expenditures.

Free cash flow per share was $1.24 in 2008, an increase of 65% compared to 2007.

Return to Shareholders

We have a continuing commitment to return capital to shareholders.

In 2008, we repurchased 141 million shares, or $2.8 billion of our stock, and introduced a dividend for a total return of capital to shareholders of over $3.3 billion.

On February 18, 2009, we announced an 8% increase in our annual dividend to $0.27 per share, highlighting our continued confidence in the free cash flow generation capacity of our business.

Financial Strengths

We remain focused on maintaining our financial strength and flexibility.

We believe our balance sheet is a meaningful asset to our shareholders. We have solid investment-grade ratings and ample liquidity to internally fund all of our debt obligations.

A Message from Brian L. Roberts