With solid earnings and low debt, Comcast would seem to be well positioned to dive into the acquisitions frenzy that is building among Big Media players. But don’t hold your breath — that’s what Comcast chairman-CEO Brian Roberts told investors Wednesday after the company unveiled strong full-year and fourth quarter financials.
The plan for 2016, barring an unexpected opportunity that emerges, is to focus on execution rather than acquisitions. Although speculation remains about Comcast expanding in the wireless arena, following its scuttled bid to buy Time Warner Cable, Roberts told investors he sees no urgent need to add another dimension to its asset mix.
“I don’t feel that we need to go and change the face of our company,” Roberts said. He cited Comcast’s mix of cable systems and powerhouse content as making it a “unique” company in the biz at present. “We’re at the cross-section of two industries and leading the way in both.”
And if that wasn’t clear enough he also asserted: “We really like the company we have now.”
Roberts confirmed that Comcast would take part in the FCC’s upcoming spectrum auction. The company is in the unusual position of being possibly a buyer and a seller. The purchase of additional spectrum capacity could help Comcast’s cable operations expand Wi-Fi and wireless services. But the 28 NBC and Telemundo-affiliated broadcast TV stations could be sellers, particularly in smaller markets. Roberts didn’t expound on the company’s plans.
“All we’re doing today is saying we’ll take a paddle in an auction to see if there’s opportunity for the company to be rewarded in that auction with something we think has strategic value,” Roberts said.
The earnings demonstrated strong momentum for Comcast’s cable business — which has defied gravity with its best net video subscriber gains in a eight years — and at NBCUniversal. Roberts and NBCUniversal CEO Steve Burke mentioned more than once on the call that the NBCU has doubled its cash flow in the five years since Comcast acquired the Peacock from General Electric.
“We bought it right but we’ve operated it even better,” Roberts said.
Universal Pictures had the most profitable year in its 100-year-plus history in 2015 thanks to the socko global box office raked in by “Jurassic World,” “Minions” and “Furious 7.” The afterglow is strong for a division that was struggling with a long run of flops just a few years ago. Comcast CFO Michael Cavanaugh gently reminded the Wall Streeters on the call that the heights of 2015 set the table for “difficult comparisons” for the studio’s 2016 performance.
Comcast’s investments in NBC are continuing with the deal unveiled this week for the Peacock to add five “Thursday Night Football” games to its schedule in the coming season. Although NBC’s price tag for the new package was high — an estimated $450 million over two years — Burke told investors on the conference call that its Sunday and Thursday football packages would not be loss leaders for the network.
Football “is the most profitable programming on television and we got (‘Thursday’) at a very fair rate,” Burke said.
On the cable networks side, Burke hailed USA Network’s breakthrough drama “Mr. Robot” as a big win for the company. He acknowledged that some of the channels have seen a “slight decline” in subscribers, reflecting the impact of cord-cutting that has become a hot-button concern for investors in media stocks.
In 2015, those declines were offset by gains from contractual rate increases — NBCU has been aggressive in the past few years about securing higher affiliate fees to raise NBCU outlets to parity with their peers. The seesaw of subscriber losses and rate gains will mean that the cable group’s financials in that area “are going to be lumpy,” Burke said.
Burke expressed optimism about the recent rebound in what had been a softer advertising market for TV during the past year. He cited the strength of the scatter sales market in recent quarters. During last year’s upfront, when overall dollar volume placed by advertisers was down, there was much talk of money migrating to digital. But now the signs are that marketers were not pulling money out of TV for good so much as “a lot of advertisers were waiting and placing their money later,” Burke said.
Burke stopped short of making a prediction about the upfront — a staple of winter-time earnings calls for media CEOs — but he did allow that current trends provide “reason to be optimistic for the trajectory for the upfront process. The pendulum is swinging a little bit back toward traditional television advertising.”
The rosy financials gave a lift to Comcast shares, which rose 2% in early trading Wednesday.
(Pictured: Brian Roberts, Steve Burke)