Comcast, in order to become one of the most powerful cable providers, is trying to by a controlling interest in NBC Universal. Earlier this week, there was speculation of Comcast bidding a whopping $35 billion for all of NBC Universal however that appeared to be a rumor. The short-term goal of Comcast is to control 51% of the company, making them the majority shareholder thus controlling NBC Universal. Various internet sources put the bid between $10-12 billion.
Although there are a lot of numbers to be crunched, one thing remains the same. If Comcast were to be the majority shareholder, it would allow them to control cable/satellite channels E! Entertainment Television, Golf Channel, Versus, Style, and several regional sports channels. This could prove interesting because of the Versus problem facing both DirecTV and DISH Network. Recently, DirecTV dropped Versus because Comcast was asking for too much money. A growing debate might be that Comcast will pull the same thing, upping the charges to carry certain channels.
NBC as a whole is struggling right now because of the recession and its slumping ratings. Although the deal is still early in negotiations, Comcast would benefit the most paying a cheap price to acquire a wide range of channels. Investors will be worried about the $35 billion bid to buy the entire thing instead of a smaller $10 billion, especially when there are so many variables to be considered in the satellite television business. As of yesterday’s closing bell (Oct. 1), Comcast shares, down as much as 7.6% ($1.29 each) earlier in the day, closed at $15.67, down 7.2% or $1.21 per share. GE (parent company of NBC and NBC Universal) shares were down 2.7% (45 cents) to $15.97 each.
Cable companies are suffering because of the ability of viewers to watch shows and content online, like Hulu and Sling. Satellite television providers are still managing to add more subscribers, but the rate has slowed. Comcast lost about 1% of its 24 million subscribers to “increased competition,” it said in its most recent financial filing. While they have made up for that loss by selling current customers on higher-priced deals, this is just a band-aid on an already hemorrhaging wound. If they do come to control NBC Universal, Comcast would also control Hulu, ironically started by NBC and Fox. If Hulu does gain more power, channels, and shows, it could draw satellite subscribers away as well. There would be no need to pay monthly rates when you could watch shows for free whenever you wanted to.
In this day and age, people want better service and convenience at a lower price. Satellite and cable providers are probably safe right now, but in the internet age, when so many things can be accessed in the blink of an eye, they might have to be weary of deals like these. It’s not to say that this is the end for DISH and DirecTV, but in the long run it could cut into their market share. And in the end, that’s the bottom line to investors. I don’t think Comcast is looking to take down all of the cable and satellite providers, but they will certainly make huge dent.
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