After months of being assailed by shareholders upset over a plunging stock price and slow response to competition from phone companies, Comcast yesterday answered its critics.
The cable company said it would start paying a 25-cents-a-year dividend (its first since 1999) and buy back $7 billion in stock by the end of 2009, reacting to investors demanding the company return more cash to shareholders. Also, the company is adopting more competitive pricing plans for its TV, Internet and phone services and boosting spending on marketing and customer service.
"We have changed some of our marketing tactics and how we compete," Chief Executive Brian Roberts said. Chief Operating Officer Steve Burke said, "We are budgeting to come out swinging, and that is both on the marketing side and the investment and product development and customer service."
The new attitude that emerged from Comcast executives was a distinct change for a company that last year appeared to be caught flat-footed by Verizon's effort to market and deploy a new TV service. After once scoffing at the threat posed by Verizon, Comcast executives now concede they are losing customers to the phone company. "There's no question Verizon is real and is taking some subscribers from us," Burke said. "We believe we're taking a multiple of the subscribers from them on the phone side that they're taking from us on the video side."
Analysts said Comcast fell short in the fourth quarter in key areas, such as high-speed Internet, which added fewer subscribers than some had forecast. Cable has long been able to offer faster Internet connections than phone companies' digital-subscriber-line offerings, but a new service being built by Verizon is allowing companies to surpass cable with faster speeds. Comcast and other cable companies hope to deploy a new technology in coming months that will help them catch up.
Among the new initiatives Comcast announced yesterday was a new $24.95 tier of high-speed Internet service, well below the $42.95 price that Comcast has charged since introducing broadband several years ago. Phone companies have for some time offered varying price tiers for high-speed Internet services, with lower prices for slower speeds. But Brian Roberts had long held firm to offering a higher price than most phone companies, a strategy that some in the industry think now was a mistake.
Comcast is also broadening the range of product bundles it offers. Instead of a single offering -- $99 for TV, Internet and phone -- it will let consumers subscribe only to phone and Internet for $49 a month, or phone and TV for $69 a month. AT&T recently announced a similar tactic. (info from The Wall Street Journal)