50 Years and Many Acquisitions Later, Comcast Is Still a Cable Company

Comcast's official logo. Source: Comcast.

To look at Comcast's (NASDAQ: CMCSA  ) official logo -- reminiscent as it is of the NBC peacock -- is to believe that the company is more about creating content than laying cable or distributing bits. The financials tell a different story.

Here's a closer look at Comcast's segment-by-segment results over the past three quarters. As you look, bear in mind that the company completed its acquisition of all 100% of NBCUniversal in March:

Segment

Q3 2013
(Revenues / Operating Income)
Q2 2013
(Revenues / Operating Income)
Q1 2013
(Revenues / Operating Income)

Cable Communications

$10,491 million / $2,697 million

$10,467 million / $2,712 million

$10,217 million / $2,611 million

NBCU-Cable Networks

$2,239 million / $670 million

$2,413 million / $678 million

$2,225 million / $675 million

NBCU-Broadcast TV

$1,644 billion / $11 million

$1,732 million / $180 million

$1,517 million / ($60 million)

NBCU-Films

$1,400 million / $185 million

$1,388 million / $30 million

$1,216 million / $65 million

NBCU-Theme Parks

$661 million / $343 million

$546 million / $158 million

$462 million / $101 million

Sources: S&P Capital IQ, TMF estimates.

Notice anything? Cable communications is not only the largest segment but also one of the most profitable, with a better than 25% operating margin. NBC's cable networks, such as USA, are also a cash cow, as are the various Universal Studios theme parks. Yet it's cable communications -- the decades-old business of delivering TV and Internet data to businesses and residences -- that still accounts for nearly 80% of pre-tax operating profits.

Forget the peacock logo. Comcast is cable, and cable is Comcast. Maybe that doesn't surprise you. Here are five other facts that might.

1. NBC wasn't Comcast's first choice. Before there was NBCUniversal, there was Walt Disney. Comcast CEO Brian Roberts led a hostile $66 billion bid for the House of Mouse in February of 2004. Former Disney chief Michael Eisner rebuffed the bid. Can you imagine if he hadn't? At the time, Disney was still two years out from acquiring Pixar and five years away from bagging Marvel -- two of its most important assets today.

2. Comcast went public on the eve of one of the worst bear markets in history. On June 29, 1972, 430,000 shares marked with the ticker CMCSA and priced at $7 each first began trading on the Nasdaq. Six months later, the U.S. stock market would started a downward spiral that would see the Dow Jones Industrial Average decline 45% between January 1973 and December 1974.

3. QVC wouldn't have happened without Comcast. Pledging $300 million to help start the televised shopping network in 1986, Comcast would sell its 57% stake in 2003 for $7.9 billion. That's a 26-bagger and a 21.2% annualized return over 17 years.

4. Comcast owns the Philadelphia Flyers. Through its Comcast Spectacor subsidiary. Team founder Ed Snider started Spectacor in 1974 as an independent entity and then sold a controlling 63% stake to Comcast in 1996.

5. Bill Gates tried, and failed, to forge a successful partnership with Comcast. The deal, struck in June 1997, saw Microsoft invest $1 billion in exchange for help accelerating the integration of the PC and TV. Earlier, Mr. Softy had spent $425 million to acquire Web TV, which also didn't work out as planned.

So what's to come? If I'm bullish on Comcast's future, it's not because of the breadth of its cable operation -- though it is vast, serving more than 24 million customers -- but because of the variety of intellectual property bubbling up through NBC and Universal operations. Content matters more than distribution, though you can't profit from content without good distribution.

Comcast, to its extreme credit, has big bets on both.

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