Comcast (CMCSA) COO Burke At Goldman: Notes

Goldman analyst Anthony Noto chats with Comcast (CMCSA) COO Stephen B. Burke:

Competition with Verizon and AT&T? Verizon has spent a lot of money to get where they are. Getting better results than AT&T. We have always questioned if they are going to get fair return for shareholders. Whether sustainable or getting kind of return they need, will leave that up to them. (VZ CEO Ivan Seidenberg presents tomorrow at 11:10 a.m.) Seems like most VZ Fios data customers are just upgrading from VZ DSL. Some VZ Fios TV customers coming from us — we can see that and feel that. On AT&T side, hard to pin down how many customers they’ve gotten in our footprint. In Houston, have a tough time figuring out what damage they are doing to us. (See Also: analysing Telco TV: Verizon, AT&T 1mm TV Subs By Year End.)

Triple play lowers churn. People more likely to stay loyal when getting multiple products from one carrier. Will it defeat competitive pressures? Sometimes. But we’re clearly better off with triple play than without it. Most customers leaving for telco or satellite are analogue-TV-only customers.

More after jump. 

Net Q3 subscriber net additions to stay on track? Hard to say. Hard to be as precise as people would like us to be. If Verizon comes out with a promo, we have to figure out how to react. I think we spoiled people by having six quarters when every metric was up year-over-year. Then we had a couple quarters that were on par or slightly less — then people think there is a big problem with cable company. Competition is going to get worse, not better.

Wireless: The one thing that we don’t have. A whole set of different strategic issues, including making Sprint joint venture work. Could be very successful without major deal or big partnership. (Sprint recently pulled out of different, Comcast-controlled SpectrumCo wireless spectrum venture.)

HDTV: Will get more aggressive in Q4 as new channels come on. So far, there hasn’t been a lot a lot of channels we felt needed to go on the dial. But as top-20 channels come out with HD versions, we will have those. Capable of 500 HD movies/selections on demand.

Spending more time looking at Internet content: Fandango acquisition. Not looking to buy gigantic companies but small acquisitions. We think we’re blessed with really good assets. No gaping hole in our portfolio.

Is Comcast complete? 7-8 years ago we were close to being 100% a video distributor. Company more diversified than 6, 7, 8 years ago. We don’t spend all of our time thinking about getting into new businesses. Not to say we won’t do fill-in acquisitions or other cable acquisitions, but not occupying a lot of time like it used to. Used to spend a lot of time looking for more content for VOD and cable modem services. Not trying to figure out how to buy big media company right now. Nobody’s for sale. 9000 hours of content on VOD.

Interactive ad biz:
Potential to be a very large business. Not material until 2009-2010.

What business can we put in place today that can be material years from now? Has to be a big business. First is commercial broadband/telephone. A lot like the residential telephone business was to us: a very big business to go after that doesn’t have much facilities-based competition (i.e. a second wire besides phone company). $15B business in our footprint owned by telcos. Wouldn’t it be nice if we could take 20% of that business? This will be a very material, large business in 2008-2009.

Seeing a lot more competition. Verizon is real. Fios exists in our footprint. VZ is taking video customers from us. AT&T is slower (and technically has a tougher road to hoe) but they are real. Satellite is still big competitor despite no triple play. Our TV business is mature. Hard to see how many years left of cable modem subscriber growth. Phone business just getting started. I don’t think there’s any reason why we can’t go past 20% [share] of that business.

Biggest industry surprise?
Biggest change in business has been triple play. Surprise in the sense that I equated bundles with discounting. What I missed and have been surprised about is that triple play helps upsell — cable, Internet and telephone.