Comcast Worth $32.50, Brings More NBC Content Online

Comcast (NASDAQ:CMCSA) is planning to bring some of the content from NBCUniversal online to make it available to pay-TV subscribers on a variety of connected devices. This includes content from channels such as USA Network, Syfy, and Oxygen. ^[1] From Comcast’s point of view, the move holds some importance as it will enhance customer experience as subscribers will have the flexibility in terms of device on which they wish to view their shows. However, the customer service enhancement will be offered by all pay-TV providers, not just Comcast, and hence there is nothing exclusive.

From NBCUniversal’s point of view, additional revenue opportunities do not exist currently, but taking some of the content online is the need of the hour. Over time, online content will form a significant share of viewing time, and more revenue opportunities will emerge in the form of ad-based monetization. For now, keeping it simple is the key.

We estimate that NBCUniversal contributes about 16% to Comcast’s value, with a majority of its value coming from cable networks such as those mentioned above. This implies that incremental revenue opportunities, which don’t exist presently with this move, will have a minor effect on Comcast in the future.

The major effect will be seen when Comcast will start providing access to its subscribers to as much content as possible, both online and on-demand. This applies to content not only from NBCUniversal but also from other media companies.

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Our price estimate for Comcast stands at about $32.50, implying a premium of about 5% to the market price.

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1. NBC Universal Chooses thePlatform To Bring USA Network, Syfy, And Oxygen Online, TechCrunch, June 19 2012 [↩]