Comcast is looking for M&A opportunities in a fast-changing landscape for the media business, but it is not in a desperate chase to get bigger. That was the message sent by Comcast chairman-CEO Brian Roberts during the company’s fourth-quarter earnings call on Wednesday.
“There’s nothing we feel we have to acquire,” Roberts said when he was pressed by analysts to comment on the M&A outlook for the conglom.
Roberts said the company has been prioritizing “organic” growth of existing operations and expansions such as the cable division’s budding Xfinity Mobile service, which counted 380,000 customers in the fourth quarter. He made only an oblique reference to the company’s run at 21st Century Fox late last year, a deal that went to Disney.
“Many of our peers re-evaluating their strategies as we’ve seen recently,” Roberts said. “Along the way there may be opportunities for us to create more value for our shareholders like we did with NBCUniversal. It shouldn’t be a surprise that we study every situation that comes along. But the bar is set high. We have been and will remain disciplined.”
Among other highlights from the earnings call:
Comcast’s focus in the MVPD is increasingly shifting to broadband rather than video. Heightened competition from upstart digital MVPDs and aggressive pricing of slimmer bundles has “brought a new normal to competition in video,” Roberts said. “We’re not in the business of chasing volume at any cost (but) we more than held our own in this environment.”
2017 was a banner year of profitability for Universal Pictures. This year is expected to be “solid,” Roberts said, but 2019 should be another strong frame as “a more robust animation slate is planned.” NBCUniversal CEO Steve Burke said the plan is to have two DreamWorks Animation titles released every year beginning in 2019, as well as another two titles from the Illumination animation unit. The film animation activity is a major driver of consumer products growth and contribute ideas and IP for Universal’s theme parks, Burke said. “Consumer products is a big upside for NBCUniversal,” he said.
Super Bowl ad sales are averaging $5 million per spot for NBC’s Feb. 4 telecast of the NFL championship, which is up 15% to 20% from the 2017 game on Fox. TV advertising in general remains strong, despite ratings challenges at virtually every linear network. Burke even went so far as to offer a bullish prediction for this year’s upfront. “By all accounts it’s going to be a strong upfront,” he said.
Burke acknowledged that digital advertising, dominated by Facebook and Google, is the growth wave that NBCU needs to catch. Investments in Buzzfeed and Vox Media have been steps in that direction. “We’re not participating in that growth to the degree we should be,” Burke said, while emphasizing that TV advertising is holding its own despite ratings declines. “Our dream is to take our television advertising and make it more targetable, more addressable and give it more of the characteristics of digital,” he said.
The savings Comcast will realize from the federal tax reform bill passed last year has given them confidence to increase capital expenditures and re-invest in various Comcast and NBCUniversal businesses. The new legislation drops Comcast’s corporate tax rate to the 24%-26% range, compared to 35%-37% previously, Roberts said.