Comcast's Stock Performance Demonstrates the Resilience of the Cable Operators

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Includes: CMCSA, DIS, NWS, TWX
by: John Bethel

The Lex Column in the Financial Times discusses US media in general and portfolio holding Comcast (NASDAQ:CMCSA) in particular:

If content is king and distribution is under pressure from the advance of new technologies, how come Comcast has quietly become the most valuable media company in the US? Since the beginning of April, the cable operator’s shares have soared 30 per cent, to produce a market capitalisation of $72bn.

Then this further down:

For now the changes on the internet are actually working to the advantage of the cable operators. Take video. While some choice is beginning to appear online, consumers are not about to switch off their cable video service – as they might cancel their traditional phone line in favour of wireless or internet telephony. In fact, an explosion of online content is encouraging a desire for ever faster internet connections. That is helping to keep cable broadband subscriptions growing at a healthy rate and underpin pricing. Meanwhile, cable is adding internet telephony as a third service across those broadband connections. Pricing of that service is sure to come under pressure, but it is currently driving new growth.

And the Lex editors end their take with this:

Admittedly, Comcast is not the only one to have crept up on Time Warner (NYSE:TWX). Disney (NYSE:DIS) and News Corp. (NASDAQ:NWS) are both within striking distance of its market value. It remains likely that companies with the best content will receive a boost over time as distribution opportunities proliferate. Still, while life will undoubtedly get tougher in a few years, investors should not underestimate the resilience of the cable operators.

CMCSA 1-yr chart:

CMCSA 1-yr chart

You can read my original rationale for buying the Comcast -- I own the Special Class A shares -- here.