NEW YORK (Reuters Breakingviews) - Comcast is earning its peacock feathers. The $170 billion U.S. media firm was early and careful expanding beyond cable. Two examples are its purchase of NBC Universal - originally with its peacock logo - and a recently launched wireless phone service. Comcast stock has trounced the shares of Verizon Communications and AT&T. The company led by Brian Roberts has even pulled away from Walt Disney’s market value this year.
Thursday’s earnings report confirmed that Comcast lost 125,000 TV subscribers in the third quarter due to competition and hurricanes, something it warned about earlier.
That doesn’t detract much, though, from the longer-term picture. In 2004 Roberts, the chief executive, made a hostile lurch for Disney only to drop the bid. Comcast finally scored when it bought NBC Universal from General Electric in a two-part, $39 billion deal. The TV outfit’s former CEO, Bob Wright, groused in his book that GE, hobbled by the financial crisis, had given away the broadcaster for a song. He reckoned it was worth $45 billion.
AT&T has tried belatedly to follow. The telecom firm offered some $85 billion for HBO owner Time Warner in October last year and is still waiting for regulatory approval. It may have overpaid: Breakingviews calculated when the deal was announced that the expected $1 billion in cost savings won’t cover the hefty $20 billion premium.
Comcast is prudently moving into other areas as well. It launched a mobile service using Verizon’s infrastructure, avoiding acquiring a carrier like T-Mobile US. That may yet be an option, but for the moment it’s mostly upside for Comcast as it dips into the cellphone business.
Roberts has made mistakes. For one, he misjudged the political climate and had to drop a bid for Time Warner Cable, which Charter Communications scooped up. But investors have little to complain about. Since March 2013, when the NBC Universal deal was finally completed, Comcast’s total return, including dividends reinvested, of 96 percent beats the S&P 500 Index and Disney on around 80 percent each. AT&T and Verizon have managed only 15 percent and 26 percent, respectively. Comcast’s steady strategy is paying off.
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