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Comcast: Peacock, Exclusivity, And - More Services?

Apr. 10, 2021 8:20 AM ETComcast Corporation (CMCSA)35 Comments
Steven Mallas profile picture
Steven Mallas


  • Comcast's NBCUniversal is reportedly considering consolidating its filmed-entertainment under the Peacock service.
  • The company also may be interested in starting a new streaming service.
  • The exclusivity gambit is a solid argument until one considers the loss of licensed revenue - there are solutions to such conundrum.
  • An additional streaming service will offer flexible opportunities for Comcast.
  • The shares are a buy for the long term, but on pullback days.

Citing Economic Downturn, NBC Universal Cuts 2009 Budget By 3 Percent
Photo by David McNew/Getty Images News via Getty Images

There are a couple news items that have caught my eye regarding Comcast (NASDAQ:CMCSA) and its continuing journey into the over-the-top industry. One mentions a possible desire on the part of

This article was written by

Steven Mallas profile picture
I have previously written articles for The Motley Fool, TheStreet, and AOLs BloggingStocks.I also write fiction. I have stories published at Nikki Finke's Hollywood Dementia site, including "The Streaming Service," "The Screenwriterman," "Mygalomorph" and "Spielberg's Last Film."Here is a link to my YA book, "Abner Wilcox Thornberry and The Witch of Wall Street."This is a collection of short horror stories: Tales From Salem, Mass.

Analyst’s Disclosure: I am/we are long CMCSA, DIS, LGF.A, LGF.B, VIAC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may initiate a position in Netflix over the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (35)

LONGBULL+ profile picture
Reading the whole article again I see that Comcast is following the strategy of VIAC

- Tier1 basis streaming
- Tier2 premium streaming
- Arms dealer licensing

This all has to do with the fact that T does not want to work together with Comcast in streaming

More than two years ago, former NBC CEO Steve Burke held conversations with AT&T's Warner Bros. to launch a joint streaming service that would have combined the two companies' libraries, but AT&T said no, choosing to focus on HBO Max


So for now Comcast follows that strategy of VIAC.

Comcast also is a gatekeeper to prevend churn:
Comcast Xfinity Flex Tops 3 Million Boxes. Comcast has deployed more than 3 million Flex devices and has X1 deployed to a sizable majority of its base of 18.9 million residential pay-TV subs.
Discovery+ was added as a tie-in.
The tie-in also adds another key premium service to Comcast's streaming and pay-TV platforms, expanding on the recent completion of similar integrations with Disney+, ESPN+ and Paramount+, ViacomCBS's successor to CBS All Access. Other services already integrated on X1 and Flex include NBCU's Peacock, Netflix, Hulu (SVoD service only), Amazon Prime Video, Comcast-owned Xumo, PlutoTV, Pandora, Tubi and Spotify, among others

Perhaps in the future there still could be combining streaming offers via a reverse Morris Trust.

Possible partners could be

The future of streaming also will be influenced because of the wireless/wired consolidation in 5G

LONGBULL+ profile picture
Some executives at NBCUniversal have worried if Peacock has enough heft to compete with Netflix and Disney. More than two years ago, former NBC CEO Steve Burke held conversations with AT&T's Warner Bros. to launch a joint streaming service that would have combined the two companies' libraries, but AT&T said no, choosing to focus on HBO Max

. Executives at Peacock and HBO Max, which is run by AT&T's WarnerMedia, have publicly stated a desire to aggregate content from other services on their streaming platforms to bulk up offerings. If consumers only have an appetite for three or four streaming services, other media companies may choose to license their content to the most popular services instead of competing on the strength of their original content
Steven Mallas profile picture
@LONGBULLPLUS Combining streaming units is a fascinating idea, but I have to wonder how that could ever be accomplished with competitive management teams.

I think Peacock will evolve over time into something different than is seen today. And on the topic of "If consumers only have an appetite for three or four streaming services, other media companies may choose to license their content to the most popular services instead of competing on the strength of their original content" I wonder sometimes if companies, especially lower-scale ones, will use streaming as a stop-gap to fill in for lack of scale and consider many of them limited in nature; in other words, imagine if a business plan for a streaming service were to be limited-edition in nature, maybe around for a year or so, and then gone. Almost like a digital collectible, perhaps...?

I do see the VIAC connection, and would say all media concerns need to follow that eventually (even NFLX at some point with its older content)
nerd_rage profile picture
Peacock's problem is that it was launched too late, because subscribers are sick of there being too many streaming services and are just sticking with the big ones.

CMCSA's solution? Launch another streaming service! Heck why not launch a hundred.

CMCSA: You. Are. Too. LATE! There is no solving this, just cut your losses and move on.

Maybe AMZN or AAPL will take NBCU off your hands or the portions valuable for streaming (the Disney-Fox approach). Or sell it to T, but the last thing they need is more content and debt. They need better execution of what they have now.

And just in general, SA needs more articles that analyze markets from the consumer's point of view, especially in a field like streaming where consumers have a lot of power.

Consumers hold the purse strings and what they do determines it all. Once you start to pay attention to consumer behavior, stuff starts to click, such as being able to predict that Netflix and Disney+ would both prosper and that the mistakes T made in HBO Max (obvious before launch) would seriously hamper them.

Just think of it this way: everyone has their streaming setup now. Netflix and Disney+ or Netflix and Amazon or maybe Netflix/Disney+/AppleTV+ etc. Various configurations shuffling around the same few names.

To the subscriber, everything is fine right now. They don't need Peacock. They have plenty to watch. Does CMCSA have anything that's going to change this cozy setup? I'm not seeing it. Reruns of The Office...please. That's just wishful thinking.

The one thing I do like about Peacock is the name. At least it stands out in a crowd. Universal+ would be just sad. What did Netflix or Hulu mean before those platforms were launched? What did Google, YouTube or Facebook mean? Those are all nonsense names, and their meaning was built up from the ground.
Steven Mallas profile picture
@nerd_rage I would agree about not using Universal+. The + thing probably should be limited at this point.

Not a bad idea about some articles focusing on consumers.

Comcast/NBCUni almost have no choice but to invest in streaming; the board would find management remiss if it didn't go after that bid. Plus, it does create a marketplace for its content (that was the whole idea behind the Hulu joint-venture approach when that platform was created). It does, though, have a lot of work ahead, especially as you have pointed out with generating killer-app content...
LONGBULL+ profile picture
"Our thoughts about the logical combination of NBCUniversal and WarnerMedia to give the combined companies the needed scale to compete with Disney and Netflix were reinforced by other conversations across town," Nathanson wrote about his check-in with his Hollywood contacts
LONGBULL+ profile picture
He said many discussions have focused on "further roll-ups of the smaller studios" via deals. "While Lionsgate is a frequently discussed takeover candidate, it was not among the companies discussed this year," he noted. "MGM is the one traditional studio most expect to get acquired eventually only if it was finally willing to sell (this was before recent press reports the company is exploring strategic options)
A MoffettNathanson report addresses pressure on content creators, the fallout of the coronavirus pandemic and a possible merger of Comcast's NBCUniversal with AT&T's WarnerMedia
Steven Mallas profile picture
@LONGBULLPLUS The part about pressure on content creators is fascinating. The comments about how all this streaming activity affects potential for box-office backend makes me think we'll be hearing soon about even more spending on above-the-line talent.
La Marque profile picture
As a Comcast shareholder, I'm comfortable with Peacock exactly as it is. No more than 5 minutes of ads per hour on the AVoD version with a limited library. Disney and The Roku Channel are pushing 60 minutes total (for a 45 minute show) on their AVoD platforms which is as bad as broadcast/cable channels with ads.

I'd say that WarnerMedia would be wise to emulate Peacock with its upcoming advertising version of HBO Max.
Steven Mallas profile picture
@La Marque I would agree, there has to be a balance with ad placement. Also, the company needs to figure out ways to integrate campaigns placed within product. No one has really figured out a best-practice way to do that yet. Considering the multi-platform approach of selling ads, limiting ads would seem a complementary concept.
LONGBULL+ profile picture
Several analysts have called for Comcast to spin-off its NBCUniversal unit, and Cahall joined the growing chorus, writing in his report that Comcast’s cable and communications business is “value trapped in an inefficient capital structure.”

He called for the media giant to either sell off the NBCU division, spin it off along with its British satellite TV business Sky, or merge it with another media business. He prefers the third option, suggesting that a merger with WarnerMedia, via reverse Morris Trust, makes the most sense

LONGBULL+ profile picture
Apple and Amazon have previously been pegged as potential buyers, but MGM’s valuation has long been seen as a sticking point. Anchorage CEO Kevin Ulrich, as chairman of MGM’s board, had wanted a price of at least $7.5 billion, according to industry insiders. The studio’s market value is about $5.5 billion including debt, said one person familiar with the company’s finances who was not authorized to comment

But it’s unclear how interested a global media company or tech titan like Apple is in paying for a movie and TV library when most companies are focused on building their Hollywood businesses through original productions, creating so-called walled gardens

LGF's Rachesky has the same idea about Lionsgate. He only wants to sell if he gets $ 40 a share which values LGF around 8.8 billion. The current enterprise value is around 6 billion. So also 40% more.
That is the same as Kevin Ulrich 36% plus on the enterprise value (marketcap and long debt)

Curious to see if MGM is sold and at what price.........
@LONGBULLPLUS . I can't imagine Comcast as it exists today giving Rachesky his price . I do think they'll work together more and more. LGF is getting even better at creating content for smaller targeted audiences.
LONGBULL+ profile picture
first we will see if MGM gets sold what the price will be this gives an indication about the valuation for LGF in a possible sale.
nerd_rage profile picture
@LONGBULLPLUS AAPL, AMZN etc would be interested in brands to use in creating their walled gardens. AAPL might be picky in the type of brands they go for - something compatible with their own brand (James Bond, Star Trek, not Godzilla vs King Kong).
LONGBULL+ profile picture
The companies announced that NBCUniversal will license content from Lionsgate for Peacock, its streaming service launching in April 2020. Peacock will have access to hundreds of feature films and shows from the Lionsgate catalog to stream alongside the previously announced slate of original series, TV shows, and films from Universal and other major studios. NBCUniversal will also license content to Starz to be featured in the U.S. and on its international streaming service, STARZPLAY, now available in 55 countries worldwide

Comcast already owns around 5% of LGF.A stock.

1. Comcast first buys LGF and later

2. spin off Time Warner merge it with NBCU/Sky via a Reverse Morris Trust.

This way T and Comcast will be ready to take a no 3 position in streaming globally after Netflix and Disney

They already have that agreement why not integrate it (LGF/Comcast)

Comcast would benefit because Starzplay already is available in 55 countries globally.

It would give the new Universal streaming offering a global boost.

Starz will loose the Sony exclusive deal in 2021 so replace it with the full list of Universal/Sky titles.

Both companies would benefit if they MERGE.

Comcast and Disney reached an agreement in 2019 that gave Disney full operational control of Hulu but allows Comcast to exit the partnership in 2024 after an independent fair market valuation with a minimum full equity value of $27.5 billion for the streamer. According to LightShed Partners principal and media analyst Rich Greenfield, Hulu could be worth as much as $45 billion, making Comcast’s interest worth $15 billion

So buying LGF valued around 6 billion would be easy to for Comcast with that 15 billion.

The new Universal streaming merged with Starzplay/LGF will become a kind of premium offering like the one of VIAC's Showtime OTT.

This means more competitive pressure for VIAC.

Also Comcast buying LGF means less antitrust regulations compared to T or VIAC buying Starz.

So the two companies who could be interested in buying Starz/LGF the most will be:

Comcast stated in their last CC that they have no gaps in their content port folio and will not do new buy outs until 2023.

So that could lead to VIAC making a deal with LGF for Starz or the whole company.

Curious to see if that happens or not now VIAC has returned to normal levels after that Archegos margin call and will Comcast allow VIAC to buy Starz/LGF or will they step in and do the deal because their position in the new Universal streaming offering will be better if they merge with Starz/LGF globally and against Showtime OTT ?

Disney ended 2020 with $17.1 billion in cash, cash equivalents and restricted cash, more than twice the $6.9 billion reported for the end of 2019; Comcast ended it with $11.8 billion, up from $5.6 billion#
Steven Mallas profile picture
@LONGBULLPLUS Very interesting read. Some of that could end up happening, although for some reason CMCSA/LGF isn't screaming out at me so much as, because of the recent NFLX deal, SNE/LGF. The latter, for inherently obvious reasons (i.e., would offer option of adding to arms-dealer model with LGF studio system, then spin-off STZ, or add STZ to SNE portfolio which lacks a streamer, then spin off LGF studio system; retain much of library in either case)

I do still see VIAC in the running, though, as one of the ideal candidates.

Nevertheless, what you outline as a benefit to CMCSA from that consolidation proposal does make sense...
LONGBULL+ profile picture
@Steven Mallas

Sony as an independent arms dealer content company is making the most money in licensing deals with the highest bidder.

And after much debate internally, Hopkins and the Sony management team have concluded that it’s not worth plunging capital into the low-margin business of direct-to-consumer streaming, opting instead to “super-serve” niche markets with products like anime streamer Funimation.

Creating a holistic direct-to-consumer streaming platform to rival the likes of Netflix or Disney Plus would be “exactly the wrong direction for us,” says Vinciquerra. “Because if we did own Epix, for instance, or Starz or Showtime, we would be committed to producing product for them, and our libraries would have to be committed to those services. I don’t think that’s the highest and best values for our libraries
Steven Mallas profile picture
@LONGBULLPLUS That's definitely a good point/other side. I think as time goes on there will have to be a decision for all smaller companies on streaming vs. supplier.
Jamjack profile picture
I think their broadband might be in for real competitive trouble. Connection monoplistic practices by any of them is coming to an end @Basit Saliu is correct in my opinion. Media will play a larger role.
nerd_rage profile picture
@Jamjack In which case, CMCSA is in real trouble because they've launched their streaming effort too late. Broadband is all they have to fall back on.
Steven Mallas profile picture
@Jamjack That would be an issue. Content/storytelling assets would therefore be even more important, and exclusivity would need to be added to the mix more aggressively...
Librarian Capital profile picture
Peacock is a minor part of Comcast's financials.

Peacock is guided to lose about $1.3bn in 2021 (having lost $700m in 2020), but that's nothing next to the $25.3bn Comcast makes from its Cable business.

Peacock is smaller than Sky ($3.1bn EBITDA in 2019), and also smaller than the Theme Parks business ($1.9bn in 2019 and building lots of new projects).

If you are think your decision to invest in Comcast is all about Peacock, then you need to spend less time reading articles like this and actually start reading the company's financials.
@Librarian Capital peacock is brand new! I doubt ppl are running to buy cmcsa based on peacock
@Librarian Capital Exactly. Peacock ... poppycock. Comcast relinquished their opportunity for long term dominance when they dismissed wireless and OTT as marginal technologies. As a result they are steadily losing cable tv, telephone and broadcast network subscribers and are left with a more commoditized and vulnerable wireline internet service provider business. As an oligopoly, they were too comfortable to provide a continuously innovative customer experience and efficient customer service.
nerd_rage profile picture
@Librarian Capital Their content part of the business is headed towards streaming and theatrical revenue, while cable/broadcast heads for oblivion.
Basit Saliu profile picture
Comcast is fortunate to own NBCUniversal (same with AT&T owning WarnerMedia) and the business was running on all cylinders pre Covid 19. Comcast through it cable division also owns Xumo so that a growth area, Peacock will take time to be a huge platform. Comcast ownership of distribution and content (vertical integration) is a great strategy now and in the future.
Steven Mallas profile picture
@Basit Saliu Agreed, thanks for the comment. Vertical integration can work wonders if properly managed, and if talent contracts can be carefully written with rational compensation practices and to avoid sweetheart-deal stuff...
Considering I have seen the good the bad and the ugly of cmcsa I have much love these last few years and view Comcast as a winner now, and next ten years. Great management and ambitious approach keeps investors stating long. 12 month target 60-65
Steven Mallas profile picture
@deadhead213 I like that thinking! That is a key point: I think management is hungry to capture some subscriber-share in the streaming universe...
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