Last year, Comcast Corp. (CMCSA), the largest cable MSO of the world, entered into an agreement to buy a 51% stake in NBC Universal from General Electric Co (GE), subject to government approval. Now, the Justice Department and the Federal Communications Commission (FCC) are considering arbitration in programming disputes as a condition of approving Comcast’s acquisition of NBC Universal.
The cable and satellite companies such as DirecTV (DTV) and Dish Network (DISH) were worried that they will lose leverage when negotiating for programming. But this acceptance in arbitration will allow these companies to negotiate with Comcast for programs.
The Comcast-NBC deal is expected to give Comcast full control of NBC’s television network, broadcast stations, cable channels and a share of the online video provider Hulu, as well as a movie studio and the Telemundo Spanish-language network and TV stations. The concern remains that Comcast will gain too much power over access and pricing for programming on television and online.
Once the deal is closed, Comcast will become the media powerhouse armed with a unique control over both content and distribution.
Despite being the largest cable MSO of the U.S., Comcast is facing severe competition from both telecom and satellite service providers that started offering subscription TV services. Especially, telecom giants such as Verizon Wireless (VZ) and AT&T (T) have started high-speed TV services using their fiber-based network. Moreover, online video from the Internet, which continues to increasingly distribute free movies, has also become a major threat to Comcast’s basic business model. In order to overcome this threat, the company is desperately looking to get hold of a vast content library to expand its own video-on-demand opportunities.
We maintain our long-term Neutral recommendation for Comcast. Currently it is a Zacks #3 Rank (Hold) stock.
The cable and satellite companies such as DirecTV (DTV) and Dish Network (DISH) were worried that they will lose leverage when negotiating for programming. But this acceptance in arbitration will allow these companies to negotiate with Comcast for programs.
The Comcast-NBC deal is expected to give Comcast full control of NBC’s television network, broadcast stations, cable channels and a share of the online video provider Hulu, as well as a movie studio and the Telemundo Spanish-language network and TV stations. The concern remains that Comcast will gain too much power over access and pricing for programming on television and online.
Once the deal is closed, Comcast will become the media powerhouse armed with a unique control over both content and distribution.
Despite being the largest cable MSO of the U.S., Comcast is facing severe competition from both telecom and satellite service providers that started offering subscription TV services. Especially, telecom giants such as Verizon Wireless (VZ) and AT&T (T) have started high-speed TV services using their fiber-based network. Moreover, online video from the Internet, which continues to increasingly distribute free movies, has also become a major threat to Comcast’s basic business model. In order to overcome this threat, the company is desperately looking to get hold of a vast content library to expand its own video-on-demand opportunities.
We maintain our long-term Neutral recommendation for Comcast. Currently it is a Zacks #3 Rank (Hold) stock.
COMCAST CORP A (CMCSA): Free Stock Analysis Report
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