• by Wayne Friedman , October 26, 2007

All of a sudden, Comcast Corp.'s TV picture has started to darken.

Just as other cable operators have done, Comcast now blames a competitive environment and a weak economy for its earning results. The finger pointing is at the new telco IPTV video services from AT&T's U-Verse and Verizon's FiOS services.

"We're seeing increasing competition and a softer economy, and as a result a slightly slower growth rate," Comcast CEO Brian Roberts said during an earnings call on Thursday.

That's not what investors wanted to hear. That news sent Comcast shares tumbling in mid-day trading, down 11% to $21.17. This came after Comcast announced a drop of a whopping 54% in earnings in its third-quarter results to $560 million.

Bad as the numbers were, those results were measured against some strong numbers a year ago--when the company added many cable systems in the wake of the Adelphia Communications acquisition, boosting Comcast earnings by nearly $700 million. Without that deal, Comcast earnings were up 2% to $560 million.

Even with that consideration, investors reacted to the weakness in Comcast's core businesses.

The growth in Comcast's newer and higher monthly fee business--digital video subscribers--was down 12%. It added 489,000 new customers, for a total of 14.7 million. Basic subscribers--those generally lower-paying customers--decreased by 65,000 to 24.1 million, versus a gain of 11,000 a year ago.

Better news came from Comcast's cable networks--E!, Style, Golf Channel, Versus and G4--which gained nearly 30% in revenue to $330 million because of a strong national TV advertising market, which has delivered double-digit price increases in programming.

Comcast said its local cable system advertising sales revenue increased 7% to $407 million. Most of that was the result of an additional week being included in the current quarter, which helped to offset declines in political advertising.

The company's quarterly revenue rose by 21% to $7.78 billion, from $6.43 billion a year ago.