(Bloomberg) -- Even as it vies to acquire Britain’s largest pay-TV broadcaster, Comcast Corp. is relying less and less on video to bolster results in its home country.
On Wednesday, the U.S. cable giant reported a 96,000 decline in video subscribers during the first quarter. That was worse than the 60,800 drop analysts were predicting and marked the fourth straight quarter of losses.
At the same time, Comcast gained 362,000 broadband customers, a better performance than expected. That helped solidify the Philadelphia company’s new role in the U.S.: an internet provider that also happens to sell TV service.
Increasingly, Comcast is treating internet -- the backbone of the streaming revolution -- as the center of its business. Video, home security and its new mobile-phone offering are mostly just serving as additional products that can lock in customers. The company has boosted internet speeds and improved home Wi-Fi service, and the latest results show how those investments are paying off.
Comcast sales representatives now pitch customers on broadband first, then other products like TV, said Dave Watson, president of the company’s cable division.
“Our focus is very much centered on broadband,” Watson said on an earnings call.
Selling online service is also more profitable than TV, where margins are thinner due to programming costs. Comcast’s broadband gains helped it post quarterly profit of 62 cents a share, topping the average analyst estimate of 59 cents.
As the field grows more crowded in the U.S., Comcast is looking overseas for growth. That’s the idea behind its 22 billion pound ($30.7 billion) bid for Sky Plc. Comcast formalized its offer for the U.K. satellite broadcaster on Wednesday, setting up a potential bidding war with Rupert Murdoch’s 21st Century Fox Inc. and Walt Disney Co.
Sky’s independent board members welcomed the offer and withdrew a recommendation that shareholders accept an earlier Fox proposal. Under the terms, Comcast would pay 12.50 pounds a share in cash, confirming a proposed offer it originally made in February. The price is 16 percent above Fox’s 10.75 pound-per-share bid for Sky.
The prospect of a costly fight for Sky has alarmed investors, who sent Comcast shares down 17 percent this year through Tuesday’s close. The stock was up less than 1 percent to $33.56 as of 9:41 a.m. in New York on Wednesday.
Like other cable providers, Comcast faces growing competition from new online TV rivals like Dish Network Corp.’s Sling TV and AT&T Inc.’s DirecTV Now. And then there’s streaming services like Netflix, Amazon and Hulu, which are gaining popularity with more original programming.
Comcast sees wireless customers as another opportunity. The company added 196,000 customer lines to its Xfinity Mobile service last quarter, bringing its total to 577,000. But for now, those users are coming at a price. They cost the company $189 million in lost earnings last quarter as Comcast spends on marketing and other upfront costs.
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