Please ensure Javascript is enabled for purposes of website accessibility

Comcast Wants to Expand its Content Kingdom

By Chris Neiger – Jul 29, 2015 at 3:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In the wake of slowing pay TV subscriptions, Comcast could be making a move to invest in more online content publications.

Apparently Comcast (CMCSA -0.65%) doesn't think its media empire is big enough. According to The Wall Street Journal, the company is in talks with Buzzfeed, Vice Media and Business Insider as it mulls investing in the media companies or making a purchase to boost its online footprint. The company is also reportedly considering expanding its 14% stake in Vox Media. 

Nothing has been settled yet, and it's possible nothing could come from the talks, but the discussions come at a time when Comcast is looking to appeal to a younger generation of media consumers who don't want their content delivered by cable TV subscriptions. And buying up, or at least investing in, these companies could give Comcast a new way to reach that population.  

Isn't Comcast big enough already?
While Comcast is a huge competitor in the media, television, and Internet markets, the company is facing a bit of resistance when it comes to its television subscriptions. In its most recent quarter, Comcast's Internet subscribers surpassed its television subscribers, pointing to a larger trend of younger users ditching traditional cable TV subscriptions for Amazon Prime, Netflix, Hulu, or other over-the-top content services.

That's not a big deal for the company right now, but as the cord-cutting and cord-shaving (or whatever other cord verbs arise later down the road) trend continues, Comcast wants to fill out its online content offerings to appeal to viewers who may not be interested in cable subscriptions. 

Specifically, WSJ mentioned that Comcast is interested in targeting younger males because they're typically more desirable to advertisers. According to the U.S. Chamber of Commerce Foundation, millennial males have an annual spending power between $125 billion and $890 billion. And they're not just one of the biggest categories of spenders either -- millennials also represent 30% of the adult male TV market, according to Nielsen. So as this demographic continues to drop out of the TV space, Comcast is looking to target it with online content instead.

Now we wait
Comcast has yet to make a final deal to invest in any of the media companies, and it's entirely possible the company is just exploring the idea right now.

And even if Comcast made a move soon, it's not as if the company would see the advertising profits start rolling in. The WSJ article mentioned that many of these media companies aren't profitable yet, so if Comcast chose to invest in some (or all) of them, it would still be a while before the company would see the benefits, if at all.   

The main point for Comcast in all of this is that the company realizes that it needs to start seriously pursuing other forms of revenue that aren't reliant on cable TV subscriptions. While the company isn't likely feeling a lot of pressure right now from cord-cutters, Comcast doesn't want to be taken off guard as the trend continues. Expanding into new content avenues now could be a good way for the company to lure Millennials back in -- and ensure Comcast's media division has a future beyond paid TV.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and Netflix. The Motley Fool owns shares of and Netflix. We Fools may not 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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.