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Comcast Nabs DreamWorks for $3.8B

Well that was fast.

A day after a report surfaced suggesting Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s interest in an acquisition, the cable company announced this morning that its NBCUniversal LLC division will buy out DreamWorks LLC in a deal valued at $3.8 billion. Assuming regulators approve the transaction, Comcast expects to close the buyout by the end of the year.

Comcast says the DreamWorks assets will join Universal Pictures, Fandango and NBCUniversal Brand Development as part of the Universal Filmed Entertainment Group. DreamWorks CEO Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will include the company ownership stakes in AwesomenessTV and NOVA.

The DreamWorks deal is far larger than Comcast's recent content investments in Buzzfeed and Vox Media, each of which totaled $200 million. However, the acquisition pales in comparison to Comcast's complete buyout of NBCUniversal in 2012 when the cable company shelled out $16.7 billion on top of the initial $6.5 billion in cash in put up for an ownership stake back in 2010.

The deal brings Comcast some much-coveted new content in the form of popular film franchise properties like Kung Fu Panda and How to Train Your Dragon, as well as a library of current and classic animated TV programs. It also gives Comcast potential distribution leverage with some of the content it already licenses, like video from AwesomenessTV that is already a part of the catalog for Comcast's Watchable online video service.

The FCC has been wary of Comcast's ability to exert undue pressure on the online video market. However, it hasn't demonstrated any significant concern over Comcast's content assets. While the FCC was ready to recommend against Comcast's acquisition of Time Warner Cable Inc. (NYSE: TWC) before that deal was dismantled, it's reasons centered on Comcast's ability to favor its own video services for distribution over those of rival online providers. Content ownership was not a major consideration. (See Comcast Denies ITV Takeover.)

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Comcast is not alone in its pursuit of new content targeted at younger generations. AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) are hot on the same trail.

In 2014, AT&T partnered with The Chernin Group to invest more than $500 million in a joint online video venture called Otter Media. Among other assets, Otter Media owns Fullscreen, which targets millennials with original video content, and which just launched a standalone subscription video service. (See AT&T Still Optimistic as Video Subs Fall.)

Verizon has been more aggressive. After buying AOL for $4.4 billion last summer, the company most recently teamed up with Hearst to acquire Complex Media, another digital media brand aimed at millennials, and it's taken a 25% ownership stake in AwesomenessTV. (See Verizon on Video: It's All About the Kids.)

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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