Comcast Today: Netflix Deal Drives Up Comcast Stock Price
It’s good to be the king.
And yes, Comcast is the king. It’s the biggest cable company in the United States. It’s going to get bigger with the acquisition of Time Warner. The weekend deal with Netflix removes an obstacle to the merger, most likely—harder for government regulators to scrutinize controversies that no longer exist—and provides Comcast with another steady flow of cash.
And that’s probably going to keep on getting better, Dividend.com adds:
Pacific Crest reported that it has raised its rating on Comcast Corporation from “Sector Perform” to “Outperform.” The firm has a $66 price target on CMCSA, suggesting a 29% upside from the stock’s current price of $51.05. Analysts see CMCSA benefiting from the merger, as it will now be able to bundle products. CMCSA has a dividend yield of 1.76%.
Nasdaq’s Martin Tillier says the deal with Netflix is better for Comcast than it first appears, because it establishes the principle that the company can charge high-bandwidth services to be delivered in pristine condition.
From this perspective, the deal announced yesterday is good for both NFLX and CMCSA. The first improves the user experience for their subscribers, while the second gets compensated for the extra demand put on their infrastructure. From CMCSA’s point of view, they are so big that the actual cash received from NFLX is unlikely to be massively significant, but the principal of charging content providers that require high bandwidth is.
Over the long term a stock’s performance is about the company’s ability to make money … uesterday’s announcement is yet more evidence that Comcast is increasingly putting itself in a position to do that and the long term prospects for the stock look even better now than last week.
Yup. Good to be king.
Other Comcastic news today.
• Earlier today, we’ve told you what the new Netflix-Comcast deal means for you, the consumer: Netflix is probably going to get more expensive. And that works to Comcast’s advantage—”And if slightly more expensive Netflix service means customers decide to stick with cable instead of joining the legions of cord-cutters? Well, that’s probably OK with Comcast, too. As of today: It gets paid either way.”
• Remember when Charter was going to buy Time Warner and Comcast was going to pick off some of Charter’s new susbscribers? Te deal is going down in similar fashion, only with the parties changing places. Bloomberg reports that Charter may pick up some customers spun off the newly merged company. And, oh yeah, that’ll be worth some money to Comcast as well: “The 3 million subscribers that Comcast may divest could be worth about $17.6 billion, based on the value that the Time Warner Cable bid placed on each subscriber, according to an analysis from Sweeney, director of North American research at Bloomberg Industries, and Geetha Ranganathan, a media analyst with Bloomberg Industries.”
• Bloomberg also reports: “The U.S. Supreme Court turned away an appeal that sought to force Comcast Corp., the largest U.S. cable television system, to make the Tennis Channel more widely available to its customers. The justices, without comment, today left intact a federal appeals court ruling that said Comcast made a legitimate business decision to offer the Tennis Channel as premium programming. Tennis Channel Inc. sought to be placed on the same tier as two Comcast-owned sports networks, the Golf Channel and NBC Sports Network. Tennis Channel argued that Comcast’s refusal amounted to discrimination in violation of Federal Communications Commission rules.”