Comcast's CEO Is Considering His Next Big Move

Comcast Corp. Chief Executive Officer Brian Roberts has a penchant for lining up a huge deal around every five years or so. It was 2018 the last time he made a big acquisition, and Wall Street is ready for his next dramatic move.

Bloomberg reports the stakes have arguably never been higher for the media and communications giant: Comcast is losing cable TV subscribers at record rates. Growth in its broadband internet business has dried up amid fierce competition from the likes of Verizon Communications Inc. and T-Mobile US Inc. The NBCUniversal division has been shaken by the departures of CEO Jeff Shell, who was ousted last month amid sexual harassment allegations, and ad chief Linda Yaccarino, who jumped ship to run Twitter. The likely sale of streaming service Hulu looms large and Hollywood writers are on strike. Comcast’s shares are down about 32% since peaking nearly two years ago.

As the largest cable TV and broadband provider in the US, Comcast has gotten too big to acquire any more cable companies. But Roberts has embraced the idea of owning more of the content his cable system can deliver. His next big move will most likely involve Comcast’s media division, an entertainment business that includes the NBC broadcast network, a stable of cable channels, the Universal and DreamWorks movie studios, streaming platforms including Peacock and a stake in Hulu, and theme parks. And yet, Comcast lacks the breadth and depth of content to rival Disney and Netflix.

Brian Roberts

Roberts may have tipped his hand last year when he briefly explored a deal involving video-game company Electronic Arts Inc., home of popular titles like Madden NFL and Star Wars. Comcast followers suspect he would still like to add that kind of highly lucrative content to his empire, possibly in deals with companies like Nintendo Co., Take-Two Interactive Software Inc. or even Activision Blizzard Inc. if Microsoft Corp.’s planned takeover fails.

“When you heard they were willing to merge with EA, it makes you think anything could happen,” said Bank of America media analyst Jessica Reif Ehrlich. “Gaming is a business with property rights that adapt well with film, television and even theme parks,” she said.

Whether it’s in gaming or media, Roberts faces pressure to acquire or combine media assets that would help create a larger entity, particularly in streaming.

One widely anticipated solution is to combine NBCUniversal and Warner Bros. Discovery Inc., the home of CNN, the Food Network and HBO’s Succession. The new venture would offer a wealth of content from sports to shows and movies on a scale that could catapult it to the big leagues.

But a tie-up with Warner Bros. could also face antitrust hurdles in attempting to merge the parent of CNN with MSNBC, and regulators in the Biden administration have had trouble with many even smaller deals. In any case, such a move would have to wait until April 2024, when certain when certain tax advantages that benefitted the Warner Bros. and AT&T Inc. deal are out of the way.

An easier path would be gaming, where Comcast would be a new entrant and present very few antitrust concerns. Plus, the company has already enjoyed blockbuster success with NBCUniversal Pictures’ adaptation of the popular Super Mario Bros. game into the biggest box office hit of the year.

The timing of any major move by Roberts could be tied to a likely decision to sell Comcast’s Hulu stake early next year. Comcast and Disney have an agreement for Disney to purchase Comcast’s one-third stake in a deal that values Hulu at a minimum of $27.5 billion. Comcast, meanwhile, also has the option to buy out Disney’s majority stake. If Roberts sells, he gets at least $9 billion to pump back into the business, fund a deal or pay off investors in a share buyback.

Michael Cavanaugh

Even if Roberts gives up Hulu, he’s leaning into streaming platforms like Peacock, which he sees as the future of TV.

Comcast is in a late and slow transition toward an online consumer video offering that can be a landing place for fleeing traditional TV customers. Peacock is Comcast’s video salvation, but right now it’s relatively puny with 22 million subscribers — compared with Disney+’s nearly 160 million — and poised to lose $3 billion this year. At a recent investor conference, Roberts said Comcast would take steps to reduce the losses at Peacock, by charging pay-TV customers for access, instead of automatically including it in their cable service.

Roberts has spent his career at the company his father Ralph Roberts co-founded and controls a third of the stock voting rights, a possible complication for activist investors. Nelson Peltz’s Trian Partners bought a stake in Comcast in 2020 saying it was undervalued and held discussions with management. A year ago Trian announced that it sold its Comcast stake.

Roberts is advised by his close No. 2, President Michael Cavanagh, who spent most of his career in banking. While Cavanagh has been at the company for almost eight years, the fact that Roberts added the media unit to his duties after Shell was ousted, rather than tap an industry vet or any of the several qualified candidates at NBC Universal, suggests there is a plan for action.