It looks like the ink hasn't even dried yet -- the deal between Comcast
Getting less attention in the play-by-play of the prolonged nuptials is Comcast's ravenous hunger for content. It has plenty to gain in this deal, so let's break down a few of the reasons why it's actually happening.
1. Comcast's cable business is dying slowly
On the surface, Comcast appears to be doing just fine. Its latest quarter finds revenue and subscribers growing by 3% over last year's third quarter. However, that growth is actually coming from the broadband-based telephone and high-speed Internet access offerings. Comcast closed out the quarter with 23.8 million cable television subscribers, fewer than the 24.4 million accounts it watched over a year ago.
Slowly but surely, consumers are cutting ties with costly cable subscriptions. Cheaper alternatives, including AT&T's
2. Diversify, diversify, diversify
Through the first nine months of the year, cable-based subscriptions account for 95% of Comcast's revenue. Programming makes up less than a 5% sliver of the revenue mix. Comcast has stakes in E!, Style Network, and a few sports-related channels, but it clearly needs more exposure to content.
3. Comcast still hearts Mickey Mouse
The country's largest cable giant never quite got over its failed bid to buy Disney
It all adds up
Comcast generates billions in annual free cash flow, so few analysts covering this story will play up any desperation on Comcast's part. The market will see the event as GE's opportunity to deleverage its assets.
I just don't see it that way. If Comcast's cable subscribers continue to cancel, Comcast has far more to gain in this deal than GE.
What do you think of the Comcast deal for NBC Universal? Share your thoughts in the comment box below.
