Just before its $45 billion deal with Time Warner Cable collapsed over regulators' fears about a giant cable company's control over the Web, Comcast was racking up more Internet customers.
For the first time, the country's largest cable provider, which also owns NBCUniversal, has more Internet subscribers than cable subscribers, Comcast said of the current quarter during an earnings call Monday.
The company said that at the end of the first quarter it had about 22.4 million customers for both services.
The advent of streaming TV is reshaping the cable industry. It is slowly dripping video subscribers while Netflix adds more, and several online TV alternatives have launched in recent months. Meanwhile, costs are rising for the TV, movies and sports that cable companies transmit — Comcast's programming expenses rose 7.8 percent last year, to $9.8 billion. Combining with Time Warner Cable might have helped Comcast gain leverage against media companies in negotiations over content costs.
Selling Internet access, however, is highly profitable. SNL Kagan, a market research firm, estimates that cash flow margins for Internet were 60 percent for cable companies at the end of last year, while video margins were 17 percent.
In the January-March period, the Philadelphia company added 407, 000 high-speed Internet customers, the most since early 2013. It shed 8, 000 video customers.
Regulators were concerned about the power that Comcast and Time Warner Cable together would have had from all those Internet customers — more than half of the country's broadband subscribers under the government's definition of minimum broadband speed. The government worried that the combined company might harm online video competitors that need Comcast's pipes to get to consumers. Comcast walked away from the deal last month.
More people are signing up for Internet, but cable bills are bigger as companies pass on content costs to subscribers. Comcast said Monday that revenue from video customers rose 3 percent to $5.3 billion, while Internet revenue rose 10.7 percent to $3 billion.