Comcast Corporation (NASDAQ:CMCSA) plans to expand its video-on-demand program to customers by launching a free, one-week preview of its platform Xfinity. It recently purchased the remaining ownership of NBC Universal from General Electric Company (NYSE:GE), and is currently bidding on broadcast rights for the 2016 Summer Olympics. The company is in full force, which makes it an attractive company to look at for a media investment.
Comcast Corporation (NASDAQ:CMCSA) offers cable television, Internet, and content subscriptions. The company owns NBC Universal and Telemundo cable television networks. It also has a film entertainment division and a stage play division. It is truly an entertainment company.
Two main competitors of Comcast Corporation (NASDAQ:CMCSA) are DIRECTV (NASDAQ:DTV) and DISH Network Corp. (NASDAQ:DISH).
| Company | Market Cap | Quarterly Rev Growth | Revenue | Gross Margin | Net Income | Net Margin | EPS | P/E | P/S |
|---|---|---|---|---|---|---|---|---|---|
| CMCSA | $110.81 billion | 6% | $65.57 billion | 68% | $6.2 billion | 9.46% | $2.28 | 18.41 | 1.76 |
| DTV | $32.438 billion | 8% | $29.74 billion | 48% | $2.95 billion | 9.92% | $4.58 | 12.36 | 1.1 |
| DISH | $17.17 billion | -1% | $14.27 billion | 40% | $636.69 million | 4.46% | $1.41 | 26.88 | 1.21 |
DIRECTV (NASDAQ:DTV) is the second largest in this group with solid top line growth over the last two years. Its net margin is the highest in the group due to lower costs. The company is heavily focused on sports programming and has many sport-specific cable packages. This comes at a premium price to subscribers. Its Latin American business is nearly as large as the United States, with 15 million and 20 million subscribers, respectively.
DISH Network Corp. (NASDAQ:DISH) is the smallest and least profitable company in this group. Over the last 5 years, the company’s subscribers have only grown at an annual rate of 0.4%. Some of these years saw a net decline in subscribers, so the growth is highly mixed. It has lost key partnerships with content providers, but did buy Blockbuster’s streaming video business in the past. It sees an uphill battle with gaining subscribers and growing its bottom line.
Comcast Corporation (NASDAQ:CMCSA) is the largest and most diversified television provider. With its NBC division, it has a goal of being the largest sports television programming station. It will come with resistance from The Walt Disney Company (NYSE:DIS)’s ESPN, which is an estimated $40 billion business. NBC Universal is roughly $30 billion.
This is the goal fueling the company’s decision to invest $4.4 billion for the 2016 Summer Olympics. With increased exposure during the Olympics, Comcast Corporation (NASDAQ:CMCSA) may be able to take strength away from other stations to eventually have better sports broadcasting. It is not an easy or quick accomplishment, but it is a mighty goal to have.
The free preview of the video-on-demand Xfinity has the potential to increase subscribers. As of December 2012, the company served 22 million video customers.
Growth in the last year was 41.45% – a staggering accomplishment for management. This growth was largely due to NBC Universal and cannot be sustained in the future. Still, next year earnings are expected come in at an impressive 23% higher than 2012. This is largely due to increase in customer base and NBC Universal operations.
The bottom line
The price target for Comcast Corporation (NASDAQ:CMCSA) is $46.15 due to many factors. There is a projected increase in cable subscription fees. While this may sound bad to cable subscribers, it is very good for investors. Also, more televisions are expected to be in homes in the United States in the next year. More televisions could mean more subscriptions. Broadband internet demand is on the rise, too. In addition, NBC broadcast and television revenues are expected to rise in the next two years. The future looks bright for Comcast in 2013.
The article A Clear Winner in the Cable TV Battle originally appeared on Fool.com and is written by Austin Higgins.
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