Peacock is Comcast’s bid to articulate a streaming strategy to Wall Street.

For some time, investors have been puzzling over how to value the company, which was built on the cable-systems business but has expanded significantly during the past decade with the acquisition of NBC­Universal in 2011 and U.K. satellite TV giant Sky in 2018. Just under half of the company’s revenue, about 48%, came from NBCUniversal and Sky in 2019 — but that means cable systems delivered the majority of its earnings.

As the 10th anniversary of the NBC-Universal purchase approaches in January, the big question around the conglomerate has become more than an academic exercise: Is Comcast a media company or a cable company?

Craig Moffett, veteran media and telecom analyst with MoffettNathanson, noted in a recent report that Comcast’s shares have lately traded in concert with Disney shares rather than those of Charter Communications, Comcast’s closest cable competitor in the U.S.

“One might grouse that the tail is wagging the dog here, but the market’s voice here is clear: It is Comcast’s non-cable assets that now dominate the narrative. It is Comcast’s non-cable businesses that are the swing factors in estimates. And it is Comcast’s non-cable businesses about which there is the most robust debate about longer-term value,” Moffett wrote in a June 29 note.

As of last week, Comcast shares were down about 13% for the year, not a bad showing amid the shock of the pandemic. But the company still trades at a steep discount relative to earnings, in part because of the fish-or-fowl debate around the company. The stock price has mostly hovered around $38-$39 since mid-May.

Peacock is seen in the marketplace as something of a tap dance by Comcast to bring the company into the streaming arena in a way that
is less disruptive to its core cable business. The focus on ad-supported free content and authenticated access to a larger library of new and vintage programming still encourages consumers to see Peacock as an add-on rather than a cable service replacement.

Comcast itself is increasingly emphasizing the growth of the broadband component of its cable operations rather than the old-school video subscribers that built the business. Video subs are steadily shrinking, quarter after quarter, for Comcast and other major operators.

Comcast’s tack with Peacock was in part an acknowledgment that it was late to wade into the streaming waters. By the time the conglom was formulating its plans for Peacock early in 2019, the field was crowded with Netflix, Hulu, Amazon and the promise of Disney and Apple launching services later that year.

Moffett pointed to another factor that is likely a curb on Comcast’s enthusiasm for investing big in streaming assets: the $40 billion price tag for Sky.

“It has depleted Comcast’s balance sheet at a time when the cash generated by the cable business might otherwise be deployed for other purposes, and it continues to raise nagging questions about capital allocation going forward,” Moffett wrote.

Sky may yet prove to be the foundation of a global streaming service for its parent company, as Moffett observed. But for now, investors are still unsure what to make of Comcast’s strategy to add a new streaming feather to the Peacock’s plume.