Despite a recent flurry of media-related M&A activity and perceptions that scale is the key to success in the direct-to-consumer streaming era, Comcast is making it clear that it won't be making any knee-jerk decisions. In fact, Comcast, owner of NBCUniversal, appears content to stand pat, if necessary.
"We've got a track record" with media M&A, Comcast CFO Mike Cavanagh acknowledged today at the JP Morgan Technology, Media and Communications Conference, in a likely reference to Comcast's acquisition of NBCUniversal in 2011 and NBCU's purchase of DreamWorks Animation in 2016.
"But hear me loud and clear: We like the hand we have. M&A is not an answer. We like the hand we have without M&A," Cavanagh said. "But we'll obviously do what's right for shareholders as time passes."
Cavanagh stressed that it's Comcast's job to consider deals that are "smart and add value." But he said the media giant still must weigh whether potential transactions are a good strategic fit and can be had at the right price.
Comcast's stance on media M&A is under the spotlight amid a recent wave of deals that include a proposed tie-up of WarnerMedia and Discovery and Amazon's $8.45 billion play for MGM.
Speculation is running rampant that Comcast needs to make a big move as well, with ViacomCBS among the rumored potential M&A targets. Meanwhile, cable industry magnate and legend John Malone stirred the pot this week by asserting that "there's no question" that Comcast chairman and CEO Brian Roberts would have wanted to snap up WarnerMedia, and suggesting the possibility of a future merger combining WarnerMedia, Discovery and NBCU.
Cavanagh was pressed if Comcast believes Peacock, the NBCU streaming service that launched last summer, is big enough to go it alone as media giants combine and others put their full weight behind direct-to-consumer streaming services. He reiterated a stance that M&A is not the only play, and a play that is not always guaranteed to work out.
"Just because you buy from the other guy doesn't mean you're going to operate it well. We've been very focused on making sure when we acquire stuff, we do not take lightly the ability to operate well, execute well. That's critical if you're going to go about it that way," Cavanagh said. "We like the rhythm we have. We like the culture we have. We like the scale of our libraries."
NBCU, he added, is also in position to invest more in content and partner up, where appropriate. "And certainly we can consider M&A, but you've got a whole host of things you've got to face up to if you're going to go down that third route. So I like where we are."
Wireless a 'priority'
Shifting to Comcast's cable unit, Cavanagh noted that mobile is now an integral part of the business and a key churn-busting piece of the broadband bundle.
"It's a priority," he said. "Why is it a priority? Because we think it's a natural bundle on connectivity between our broadband business and wireless."
Comcast added 278,000 mobile lines in Q1 2021, ending the period with 3.1 million. Xfinity Mobile, a service launched in April 2017, has also achieved profitability on a standalone basis. Cavanagh said Xfinity Mobile's new family-oriented unlimited plans, made possible by a revised MVNO deal with Verizon, has seen "good take-up in the recent weeks across all our channels – in-store, digital and otherwise."
But Cavanagh was not prepared to join in Charter Communications CFO Chris Winfrey's analogy that the mobile business is sizing up to be like cable's entry into home phone market years ago and, therefore, poised to penetrate about half of the broadband customer base.
"I wouldn't throw out any particular numbers … I'm sure he's right," Cavanagh said. "But we'll keep working at it. And we won't stop at 50 [percent]. We'll go to wherever the opportunity takes us. We have a good runway ahead."
However, he pointed out that mobile is just one service Comcast is using to gain and retain broadband customers, citing services such as Xfinity Flex, a streaming product for broadband-only subs, and Comcast's home security offering. "We have more than one arrow in the quiver," Cavanagh said. "I think wireless is an excellent one."
Comcast is also not ready to match up with Charter's plan to start building its first CBRS market in 2021 as part of an effort to reduce MVNO costs in high-traffic areas.
"We know that path is available, but there are other paths, too," Cavanagh said. "We've got plenty of time for that."
- Amazon strikes $8.45B deal for MGM
- Comcast's wireless biz turns the corner
- Comcast gets aggressive with unlimited mobile 5G pricing
- AT&T exits content big time in tie-up with Discovery
- Podcast: AT&T unravels its content, pay-TV empire
— Jeff Baumgartner, Senior Editor, Light Reading