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Investor

Comcast Reports Second Quarter 2004 Results

Philadelphia, PA.

Cable Revenue Increased 10.4% to $4.839 Billion
 Cable Operating Cash Flow Increased 20.1% to $1.920 Billion

2004 Guidance for Cable Operating Cash Flow Increased to Approximately $7.5 Billion or 18% Growth

Consolidated Operating Income Doubled to $852 Million

$750 Million of Stock Repurchased 

Stock Repurchase Program Increased by $1 Billion

Comcast Corporation (Nasdaq: CMCSA, CMCSK) today reported results for the quarter ended June 30, 2004. Comcast will discuss second quarter results on a conference call and webcast today at 8:30 AM Eastern Time. A live broadcast of the conference call will be available on the investor relations website at http://www.cmcsa.com and http://www.cmcsk.com.

Brian L. Roberts, Chairman and CEO of Comcast Corporation said, "We are again reporting outstanding results. Our cable division generated double-digit revenue growth of over 10% and Operating Cash Flow growth of 20% this quarter. As a result, we expect to report approximately $7.5 billion of Operating Cash Flow in 2004, a growth rate of 18%.

"Cable's strong second quarter results and improved outlook for the remainder of the year reflect robust growth in new video and high-speed Internet services as we deliver compelling video services like Comcast ON DEMAND and HDTV and as we continue to expand the features offered to our high-speed Internet customers. We are also generating significant operating improvements and scale efficiencies that are driving Operating Cash Flow growth and improving operating margins. We are reporting cable operating margins of nearly 40% for the second quarter - well ahead of our expectations. This strong performance demonstrates our continued operational success in the acquired cable systems and the ability to leverage our scale.

"The content division also posted strong results this quarter with revenue growth of 25% and almost 38% growth in Operating Cash Flow.

"With the upgrade of our networks now essentially complete, we generated $500 million of Free Cash Flow this quarter as cable capital expenditures declined 15% and Operating Cash Flow grew by more than 20%. We remain on track to reach our goal of $2 billion of Free Cash Flow this year. We will continue to make investments that support the Company's growth while returning capital to shareholders. Since the initiation of our $1 billion stock repurchase program in December 2003, we have repurchased $750 million of our stock, and I am pleased to announce that our Board of Directors has authorized a $1 billion increase to our repurchase program.

"We are confident in our ability to continue to provide outstanding operational and financial performance that leverages our newly-rebuilt networks, to deliver unmatched products to our customers and value to our shareholders."

Comcast Cable Results

Cable results for the second quarter and the six months ended June 30, 2004 are presented on a pro forma basis. Pro forma cable results adjust only for acquisitions and dispositions and are presented as if the acquisitions and dispositions were effective on January 1, 2003. Please refer to Table 6-A for a reconciliation of pro forma data.

Comcast Cable reported revenue of $4.839 billion for the quarter ended June 30, 2004, representing a 10.4% increase from the second quarter of 2003. Video revenue for the quarter increased 6.9%, driven by a 5.7% increase in average monthly revenue per basic subscriber and a 20.5% increase in digital revenue primarily reflecting a 1.1 million increase in the number of digital cable subscribers. Basic subscribers of 21.5 million are essentially unchanged from a year ago but down 96,000 or 0.4%, from the prior quarter due to seasonality and modestly lower gross additions. During the second quarter of 2004, Comcast Cable added more than 206,000 digital cable subscribers to finish the quarter with nearly 8.1 million subscribers, or 37.5% of basic subscribers.

Video revenue growth reflects increasing consumer demand for new digital features, including Comcast ON DEMAND, high-definition television (HDTV) programming and digital video recorders (DVRs). During the second quarter, pay-per-view revenues increased 26.0%, driven by more movie and event purchases through the Comcast ON DEMAND service. Increasing demand for HDTV is also contributing to digital growth - at the end of the second quarter, Comcast had almost 600,000 HDTV set-top boxes in customers' homes.

High-speed Internet service revenues increased 39.2% to $763 million in the second quarter of 2004, reflecting continuing strong growth in subscribers. Comcast Cable ended the second quarter of 2004 with more than 6.0 million subscribers, a 36.8% increase from the same quarter last year. During the second quarter of 2004, Comcast Cable added 327,000 high-speed Internet subscribers resulting in a penetration rate of 16.1% of available homes. Comcast Cable added more than 1.1 million homes to the high-speed Internet service footprint in the second quarter of 2004, and this service is now available to 37.3 million, or 92.6%, of homes passed. Average monthly revenue per high-speed Internet subscriber was $43.52 in the second quarter of 2004, in line with the second quarter of 2003 and a $1.07 increase from the $42.45 reported in the first quarter of 2004.

Advertising revenue for the second quarter of 2004 increased 15.3% to $330 million, reflecting growth of 6.0% in local advertising and strong growth of 25.4% in regional/national advertising as a result of the continuing success of our regional interconnect strategy.

As expected, cable phone revenue declined 13.8% from the second quarter of 2003 to $177 million in the second quarter of 2004, reflecting a 10.4% decrease in subscribers to 1.2 million and a 3.0% decline in average monthly revenue per subscriber to $47.71. Excluding telephone revenue, which is expected to decline throughout 2004, total revenue for Comcast Cable in the second quarter of 2004 increased 11.6%. Telephone results reflect the Company's focus on profitability, not unit growth, of the acquired circuit-switched telephone business as it begins to transition to VoIP phone service.

Cable operating income before depreciation and amortization (Operating Cash Flow) grew 20.1% to $1.920 billion for the quarter, an increase from the $1.598 billion reported for the second quarter of 2003. Operating Cash Flow increased due to solid revenue growth and lower customer service, phone and high-speed Internet service expenses. These declining expenses along with a reduction in the rate of growth in video programming costs contributed to Operating Cash Flow margins of 39.7% for the second quarter of 2004, an increase from the 36.5% in the second quarter of 2003.

Cable capital expenditures declined 14.8% to $893 million compared to the $1.047 billion in the second quarter of the prior year. The decline in cable capital expenditures reflects the near-completion of the Company's cable network upgrade. Comcast Cable finished the second quarter with 97% of its cable network upgraded to provide advanced services.

Content

Comcast's content segment consists of the national networks E! Entertainment Television and Style Network (E! Networks), The Golf Channel, Outdoor Life Network and G4techTV.

Comcast's content segment reported second quarter 2004 revenue of $199 million, a 25.3% increase above the second quarter of 2003 reflecting increases in distribution and advertising revenue for all the networks. The Content segment reported Operating Cash Flow of $77 million in the second quarter of 2004, a 37.6% increase above the second quarter of 2003.

In an agreement with Liberty Media announced on July 21, Comcast will exchange its 120.3 million shares of Liberty Media common stock for 100% ownership in a subsidiary of Liberty Media that primarily holds $545 million in cash, a 100% ownership interest in International Channel Networks and a 10% ownership interest in E! Entertainment Television. This transaction is expected to close this week and will result in Comcast owning 60% of E! Entertainment Television.

Corporate and Other

Corporate and Other includes Comcast-Spectacor, corporate overhead and other operations and eliminations between Comcast's businesses. In the second quarter of 2004, we reported Corporate and Other revenue of $29 million and an Operating Cash Flow loss of $45 million as compared to revenue of $56 million and an Operating Cash Flow loss of $41 million in the second quarter of 2003. The decline in revenue in the second quarter reflects fewer playoff games for teams owned by Comcast-Spectacor.

Consolidated Results

Comcast sold its 57% ownership interest in QVC in September 2003. QVC's results, prior to its sale, are presented as discontinued operations. Consolidated amounts primarily reflect the results of the cable division as discussed above.

For the three months ended June 30, 2004, the Company reported consolidated revenues of $5.066 billion, a 10.3% increase to the $4.594 billion reported in the same period of 2003. Consolidated Operating Cash Flow increased to $1.952 billion or 21.1%, in the second quarter of 2004, from the $1.612 billion reported in the same prior year period. Operating income doubled to $852 million in the second quarter of 2004 compared to operating income of $425 million in the second quarter of 2003.

For the three months ended June 30, 2004, the Company reported consolidated net income of $262 million or $0.12 per share compared to a consolidated net loss from continuing operations of $93 million or $0.04 per share in the second quarter of 2003. This includes the effects of non-recurring mark-to-market adjustments that are included in investment income. For the six months ended June 30, 2004, the Company reported consolidated net income of $327 million or $0.14 per share compared to a consolidated net loss from continuing operations of $448 million or $0.20 per share in the six months ended June 30, 2003. Please refer to the "Reconciliation of Net Income (Loss) to Free Cash Flow" in Table 6-B at the end of this release and the Company's Form 10-Q for further details on items affecting net income.

Share Repurchase Program

Comcast's Board of Directors has authorized an increase of $1 billion to the existing share repurchase program announced on December 18, 2003. The Company is now authorized to repurchase up to $2 billion of its outstanding common stock and has current availability to purchase $1.25 billion of its stock. Comcast expects such repurchases to continue to occur from time to time in the open market or in private transactions, subject to market conditions. Through July 2004, the Company has repurchased $750 million of its Class A Special common stock or 26.7 million shares.

During the second quarter, the Company elected to redeem, for $400 million in cash, two debt issues that were exchangeable into Comcast Class A Special common stock, eliminating the need to issue 14.9 million shares. Including the open market repurchases of $700 million made since the resumption of the repurchase program in early May, the Company has invested $1.1 billion in its common stock and related securities.

Financial Guidance 2004

Comcast Cable Reaffirms:

  • Revenue growth of approximately 10%.
  • High-speed Internet subscriber net additions of between 1.5 and 1.6 million and high-speed Internet service revenue growth of more than 30% while generating average monthly revenue per subscriber above $40.
  • Digital Cable subscriber net additions between 700,000 and 1 million.
  • Cable capital expenditures of between $3.3 and $3.4 billion.

Comcast Cable Updates:

  • Raised OCF guidance to approximately $7.5 billion or a growth rate of 18%, an increase from original guidance of 15% to 17% growth reflecting increased revenues as well as a reduction in the rate of growth in video programming costs and lower customer service, phone and high-speed Internet service expenses.
  • Expect to maintain basic subscribers of approximately 21.5 million, modestly below original guidance net additions of 0.5% or approximately 100,000 subscribers. The revised outlook for basic subscribers is not expected to have a meaningful impact on revenue, Operating Cash Flow or Operating Cash Flow margin.
  • Guidance for Cable Phone subscribers is lowered to a net loss of up to 100,000 subscribers in 2004 from original guidance of up to 50,000 additions. The outlook for Cable Phone subscribers reflects the Company's focus on profitability, not unit growth, of the acquired circuit-switched telephone business as it begins to transition to VoIP.

Comcast Content Reaffirms:

  • On a combined basis, Comcast expects its Content division, consisting of its national cable networks, to deliver revenue growth of at least 20% and OCF growth of at least 30% in 2004.

Other Financial Guidance Reaffirmed:

  • Comcast expects to generate consolidated Free Cash Flow of $2 billion.

This press release contains forward-looking statements. Readers are cautioned that such forward-looking statements involve risks and uncertainties that could significantly affect actual results from those expressed in any such forward-looking statements. Readers are directed to Comcast's Quarterly Report on Form 10-Q for a description of such risks and uncertainties.

In this discussion we sometimes refer to financial measures that are not presented according to generally accepted accounting principles (GAAP). Certain of these measures are considered "non-GAAP financial measures" under the Securities and Exchange Commission (SEC) regulations; those rules require the supplemental explanation and reconciliation provided in table 6 of this release.

Comcast Corporation will host a conference call with the financial community today, July 28, 2004, at 8:30 a.m. Eastern Time (ET). The conference call will be broadcast live on the Company's Investor Relations website at http://www.cmcsa.com or http://www.cmcsk.com. A recording of the call will be available on the Investor Relations website starting at 12:30 p.m. ET on July 28, 2004.

Those parties interested in participating via telephone should dial (847) 413-2408. A telephone replay will begin immediately following the call until July 29, 2004 at midnight ET. To access the rebroadcast, please dial (630) 652-3000 and enter passcode number 9196739#.

To automatically receive Comcast financial news by email, please visit http://www.cmcsa.com or http://www.cmcsk.com and subscribe to e-mail Alerts.

Comcast Corporation (http://www.comcast.com) is principally involved in the development, management and operation of broadband cable networks and in the provision of programming content. The Company is the largest cable company in the United States, serving more than 21 million cable subscribers and is the nation's largest broadband Internet provider with more than 6 million customers. The Company's content businesses include Comcast SportsNet, Comcast-Spectacor, E! Entertainment Television, Style Network, The Golf Channel, Outdoor Life Network and G4techTV. Comcast Class A common stock and Class A Special common stock trade on The Nasdaq Stock Market under the symbols CMCSA and CMCSK, respectively. 

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