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In 2005, consolidated revenues increased 9.6 percent to $22.3 billion. Operating cash flow(1) rose
12.8 percent to $8.5 billion, our fifth straight year of double-digit growth.
During the year, we sold more than 2.6 million new products — or revenue generating units (RGUs), as they are known in the industry — and increased our average monthly revenue per customer from
$77 to nearly $84. To build on this momentum, we strengthened our fiber-rich cable infrastructure —
creating a truly “converged” network — to facilitate the deployment of new services, including Comcast Digital Voice. We also partnered with technology and consumer electronics leaders to drive innovation and expand our services across all platforms.
At the same time, we expanded our ON DEMAND library with hundreds of movies from Sony and Starz/Encore, premiered PBS KIDS Sprout, and launched partnerships with the National Hockey League and, most recently, the PGA TOUR. These investments not only increase the value of our cable networks, they also enable us to provide unique content to Comcast customers and to
differentiate our products in the marketplace.
Where Others See Uncertainty, We See Opportunity
Despite our strong results in 2005, the value of Comcast common stock declined 22 percent, compared to a 3 percent increase in the S&P 500 during the year. Why the disconnect? The most likely explanation is that unprecedented changes are taking place in the way communications services and content are delivered to consumers. Comcast has been at the leading edge of this transition. But with so many new contenders and approaches in the marketplace, there is a fog
of uncertainty about who the winners and losers will be.
While no one can predict the future, I believe tomorrow’s leaders will be those companies that master change and provide customers with exciting new products and services that make their
lives easier, more efficient — and a whole lot more fun. At Comcast, that is exactly our game plan. We are building a superior communications and entertainment experience that will enable us to sustain our growth and deliver long-term value to shareholders.
Transforming the Television Experience
 A few years ago it became clear to us that the future of television would be much more personalized, and that viewers want the power to decide what to watch on their own schedules. So we decided to make video on demand a centerpiece of our offerings.
Today, our ON DEMAND service leads the market, offering
7,000 program options a month. Demand skyrocketed in 2005, as
customers watched more than 1.4 billion ON DEMAND programs,
far surpassing our expectations. In addition, we offer the latest digital
video recording (DVR) technology and the best selection of high
definition (HD) programming, including local high-def channels, to
expand our customers’ viewing choices.
The result is a total entertainment experience that customers
value, and that satellite providers and other competitors have not been able to duplicate. During 2005, that helped us to attract 1.1 million new Comcast Digital Cable customers — for a total of 9.8 million
at year-end — increasing our digital penetration to 46 percent. More than 2.4 million digital cable customers also have HD/DVR set-top boxes, more than double the number of a year ago.
We continue to enhance our services to drive digital growth. We’re expanding the launch of our enhanced cable service, offering 100 percent digital quality, an interactive program guide and select ON DEMAND programming to customers as an attractive alternative to our analog cable service.
| (1) | Operating Cash Flow is defined as operating income before depreciation and amortization and impairment charges, if any, related to fixed and intangible assets and gains or losses from the sale of assets, if any.
Free Cash Flow is defined as Operating Cash Flow less net interest, cash paid for income taxes, and capital expenditures. Reconciliation of this item appears under “Reconciliation of Non-GAAP Measures.” |
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