Comcast Wins in Sony-MGM Deal

Sure, Sony (NYSE: SNE  ) claimed victory this week in the bidding war for Metro-Goldwyn-Mayer Studios (NYSE: MGM  ) in a deal worth about $5 billion after Time Warner (NYSE: TWX  ) dropped out of the battle. But behind the scenes, the real winner is Comcast (Nasdaq: CMCSA  ) .

Hidden in the news coming out of the Sony-MGM merger is an important tidbit that shouldn't be missed. Comcast and Sony quietly inked a side deal that lets the cable giant distribute Sony and MGM content on its video-on-demand (VOD) platform. A joint venture will be run by Comcast with the aim of using Sony's expanded library of movies to build new cable channels. Even if Sony's bid for MGM doesn't go through, Comcast and Sony still have a deal that gives Comcast access to Sony's enormous library of Columbia and Tri-Star studio movies and TV programs.

The deal advances Comcast's competitive position. With all of Hollywood's other major studios already owned by media companies, the Sony and MGM movie treasure trove will give Comcast a leg up in the fierce battle for program licensing.

Meanwhile, Sony and MGM programming will give a big boost to Comcast's VOD offerings. With VOD, Comcast has a competitive edge over its satellite rivals EchoStar Communications (Nasdaq: DISH  ) and DirectTV (NYSE: DTV  ) . Satellite providers can't deliver VOD because it requires a two-way, high-bandwidth link.

After investing heavily in its broadband networks, Comcast wants to be a content player. The Sony deal shows that Comcast hasn't abandoned the goal of shifting into content, even after the aborted takeover bid for Disney (NYSE: DIS  ) this year that rattled investors' nerves and Comcast's share price. The Sony deal gives Comcast the right to acquire a 20% stake of MGM for about $300 million. Comcast can start to quietly and comfortably make its moves.

Fool contributor Ben McClure hails from the Great White North. Ben doesn't own any shares mentioned here.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 501700, ~/Articles/ArticleHandler.aspx, 10/21/2016 7:58:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
CMCSA $64.35 Down +0.00 +0.00%
Comcast CAPS Rating: ***
DIS $92.03 Down +0.00 +0.00%
Walt Disney CAPS Rating: *****
DISH $59.18 Down +0.00 +0.00%
DISH Network CAPS Rating: **
DTV.DL $0.00 Down +0.00 +0.00%
DirecTV CAPS Rating: ***
MGM $26.12 Down +0.00 +0.00%
MGM Resorts Intern… CAPS Rating: ***
SNE $32.72 Down +0.00 +0.00%
Sony CAPS Rating: ***
TWX $82.99 Down +0.00 +0.00%
Time Warner CAPS Rating: ***