What will Comcast buy?
Wireless? Foreign films, parks? More software?
Setting aside its failed Time Warner Cable merger bid, Comcast since 2012 has shifted focus from investing in "traditional cable, satelite and broadcasting" toward "Internet, software and media investments" in an effort to "broaden Comcast's audience base" among viewers and focus on online video, targeted ads and multi-play technology, writes analyst Amy Yong in a report to clients at Macquarie Capital USA.
After Comcast's recent acquisitions of "high-growth opportunities" This Technology, Buzzfeed, Vox Media, Visible World and FreeWheel, investors are "wondering the next move on the M&A front" by Comcast, Yong adds. The company is well-armed for future deals with a relatively fat balanced sheet, "impressive acquisition track record" and new CFO Michael J. Cavanagh, a longtime member of empire-building JPMorgan CEO Jamie Dimon's inner circle.
What will Comcast buy next? "We are not boxing out a potential T-Mobile merger," but a long-in-coming Comcast return to mobile telephony will more likely mean more deals with wireless companies "on the fringes" of its markets. Comcast could focus on "extending NBCU franchises globally, particularly in films and parks" where Comcast has made more money than expected.
Yong says she's mined Comcast help-wanted posts and found a concentration of sales, technical and field operations posts that suggest the company is going ahead with proposals to "upgrade the entire network footprint with DOCSIS within the next two years" and expand X1 deployment to more than half its 20 million customers. Leverage, at double sales, is less than other pay TV companies. Comcast's share of the Weather Channel coudl be liquidated for $750 million. The launch of Comcast Ventures by past CFO Michael Angelakis "coudl be a vehicle used to broaden growth opportunities" and new cash.
Meanwhile Comcast is spending more than half a bilion a month buying back shares and keeping up the stock price, pleasing investors.
Comcast is poised to benefit from increased advertising in advance of the 2016 Presidential elections. Yong notes that Comcast typically more than doubles ad revenues in election years.