CMCSA Comcast Corporation

By Shalini Ramachandran and Cassandra Jaramillo 

Despite fears of cord-cutting and competition from cheaper streaming options, Comcast Corp. said it lost fewer video customers in the second quarter and reported higher revenue from its NBCUniversal cable channels and broadcast networks.

But that doesn't mean the cable giant is resting easy. On the company's earnings call Wednesday, NBCUniversal Chief Executive Steve Burke said that media giants, including NBCU, may seek to cull their smaller cable channels in favor of marquee channels as pressure grows in the pay-TV world.

"I think you'll see more of that with us and others as the discussions with [pay-TV providers] get more and more contentious," Mr. Burke said. NBCUniversal will continue to "invest in the big guys," such as the USA cable channel and NBC broadcast network, and "try to trim some of the smaller ones."

"There's just too many channels and people are spending too much programming channels that are not fully distributed" across American pay-TV homes, Mr. Burke said.

He noted that NBCUniversal has already repurposed some of its "marginal" channels like G4 and Style over the past few years. "We've done some; I think there's more to do," he said.

Media companies long helped fuel their profits by using the power of their popular channels to get wider carriage of many smaller ones. Mr. Burke's comments suggest that those practices may have to change due to tumult in the pay-TV business from cord-cutting and cheaper streaming options.

His comments came as Comcast reported better-than-expected financial results in the most recent quarter. Net income fell to $2.03 billion, or 83 cents a share, compared with $2.14 billion, or 84 cents a share, a year ago, dragged down by a weaker performance at the film studio without a major blockbuster release during the period.

Revenue grew 2.8% to $19.27 billion. Both earnings and revenue exceeded estimates from analysts. Comcast shares rose 1.2% to $67.98 in midday trading Wednesday.

Comcast lost 4,000 video customers in the seasonally weak second-quarter when many families move or customers cancel cable-TV service during the summer months. It was an improvement from the 69,000 subscribers lost in the year-ago period and its best second-quarter performance in a decade.

Cable companies are benefiting from investing more in their cable-TV products and bundling them alongside fast broadband. Comcast, in particular, is reaping rewards from rolling out its next-generation X1 internet-connected set-top box and guide, which the company has said increases the time customers spend watching TV and makes them more likely to stick with Comcast. As of the second quarter, 40% of customers now have X1 boxes.

Comcast also likely was helped by weakness at its rivals, as AT&T focused on integrating DirecTV and Dish Network Corp. faced blackouts amid carriage disputes, Wells Fargo analyst Marci Ryvicker said in a research note earlier this month.

On the call, Comcast executives continued to say that despite early success with the X1, they have no plans to roll out a streaming TV service nationwide outside of their cable footprint. Comcast CEO Brian Roberts said such "over the top" economic models are "unproven to us" and "it's not clear that's the right strategy for us."

Comcast executives struck an optimistic note about the Rio Olympics, which kick off next week, despite some of the early controversies and negative headlines about the Zika virus. Noting that the company made $120 million in profit from the 2012 London Olympics, NBCU's Mr. Burke said "we are going to make a lot more in Rio."

Comcast's broadband and business services divisions reported sales growth in the second quarter, boosting overall revenue at the cable business. The cable unit, which accounts for the bulk of the company's revenue, posted 6% sales growth to $12.44 billion.

Broadband revenue increased 8.6% to $3.37 billion, as the company added 220,000 broadband customers in the quarter compared with 180,000 a year earlier.

Video revenue grew 2.8% to $5.58 billion, while business-services revenue jumped 17% to $1.36 billion. Voice revenue fell 1.1% to $893 million.

At NBCUniversal, revenue fell 1.8% to $7.10 billion, as declines in filmed entertainment offset growth at its television networks and theme parks. Operating cash flow at NBCUniversal was relatively flat at $1.69 billion.

Filmed entertainment posted a 40% drop in revenue and 87% decline in operating cash flow as Universal Pictures lacked a major blockbuster release in the second quarter. A year ago, the studio had box-office hits including "Furious 7" and "Jurassic World."

Revenue grew 4.7% to $2.57 billion at the unit that includes Comcast's cable TV channels, including Bravo, USA Network and Syfy, and operating cash flow grew 8.3% to $944 million. Revenue at the broadcast-TV segment, which includes the flagship NBC network, increased 17% to $2.13 billion.

Revenue at NBCU's theme parks segment grew 47% to $1.14 billion, thanks to the inclusion of Universal Studios Japan, which Comcast bought control of last September, as well as Universal Studios Hollywood's opening of the Wizarding World of Harry Potter.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com and Cassandra Jaramillo at cassandra.jaramillo@wsj.com

(END) Dow Jones Newswires

July 27, 2016 12:59 ET (16:59 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.