Will Comcast Rule the World?

Analysts are expecting Comcast's (Nasdaq: CMCSA  ) fourth-quarter earnings to come in at $0.42 a share, an increase of 23.5% over the same period a year ago. That would give the company yearly earnings of $1.52 per share. If the likely assumptions of a profitable quarter prove out, it would be the fourth such in a row. Third-quarter income was up 4.7%, the second quarter up 15.6%, and Q1 up 8.9%.

Comcast Corporation Stock Chart

Comcast Corporation Stock Chart by YCharts

Late fourth-quarter play
A big move that Comcast pulled off near the end of the quarter was its deal with Verizon (NYSE: VZ  ) . That agreement traded wireless spectrum -- hoarded by SpectrumCo members Comcast, Time Warner Cable, and Brighthouse Networks since 2006 -- for cash and a co-marketing arrangement. The deal gives Comcast the rights to resell Verizon's wireless services, making a quadruple play (fixed-line phone, wireless phone, video, and Internet) a viable offering.

That deal, though, has become somewhat controversial, with Sprint Nextel (NYSE: S  ) , T-Mobile, and DirecTV (Nasdaq: DTV  ) petitioning the Federal Communications Commission to have Verizon and the SpectrumCo companies make the details of the co-marketing arrangements public. The Senate Antitrust Subcommittee, under the chairmanship of Sen. Herb Kohl (D-Wis.), has also called for hearings on this matter. Even though Verizon and Comcast have already initiated their marketing plans, final approval from the regulatory agencies has not yet been given.

With its acquisition of NBC Universal finally approved a year ago, Comcast has expanded well beyond its core cable business into the content-creation area, an area with notoriously variable financial outcomes. The NBCU deal gave the cable company theme parks and a film studio as well.

The company has also been stealing fixed-line phone customers away from Verizon and AT&T (NYSE: T  ) , a feat notable for the general decline in fixed-line phone interest as wireless service grows. But it's the cable business that provides most of the oomph to the company's coffers -- more than two-thirds of its consolidated revenues. However, like most cable TV providers, the company has been losing TV subscribers to the Internet's ability to stream video into households. So besides competition from the satellite TV providers, Comcast has to fend off the likes of Netflix with its streaming content.

A key element
Of major interest in Comcast's upcoming earnings statement, and especially in the conference call, will be how the Verizon deal is addressed. If that deal does end up getting final approval, it could be a real game-changer in what is becoming a topsy-turvy cable/satellite/wireless world.

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Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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