) will report its Q4 2012 earnings on February 13, and we expect
pay-TV subscriber additions to remain roughly flat compared to the
fourth quarter of 2011. The broadband business will benefit from
continued strong demand and Comcast's efforts to build WiFi
hotspots nationwide. In addition to this, we expect NBCUniversal to
perform well driven by improved ratings in the new season and
better economy that's driving consumers to theme parks. Although on
sequential basis, there will be a decline as the third quarter had
benefited disproportionately from summer Olympics broadcast.
Advertising business may also get some boost from improved
subscriber trends and political ad spending.
See our complete analysis for Comcast
Pay-TV Business - What To Expect?
Comcast lost close to 17,000 net pay-TV subscribers in Q4 2011.
That was a huge improvement over prior figures, but the company's
losses have increased since then. Last quarter it lost close to
117,000 net subscribers in its pay-TV business. Given that Q4 tends
to be seasonally strong, we expect that Comcast may be able to
match last year's figure. According to research firm Jefferies
& Co., Comcast will report an improvement in net pay-TV
subscriber losses, over the fourth quarter of 2011. In any case, we
expect that situation wouldn't be worse. The company has been
making efforts to improve customer service and push its on-demand
and streaming content.
A quick review of Comcast's history reveals that its cumulative
on-demand views increased from 11 billion in 2009 to 20 billion in
2011. While the company continues to enrich its on-demand content,
its subscription streaming service Xfinity Streampix's is also
helping in subscriber trend improvement.
NBCUniversal Will Benefit From Improved Ratings And
We estimate that NBCUniversal business constitutes more than 15%
of Comcast's value. Most of this segment's profits come from its
cable networks. However, fourth quarter results will benefit from
improved ad pricing, better performance of NBC broadcasting, as
well as improvement in general economy that has led to increased
theme park attendance as well as per capita spending.
After three weeks of the opening of its 2012-13 broadcasting
season, NBC was up 15% in ratings compared to the same period last
year while the other broadcasting networks were down by 12% to 24%.
Comcast reported in January that NBC has been the number one
broadcasting network among 18-49 demographic for 13 out of 15 weeks
of the new season. This speaks for the company's efforts of
re-working its programming to revive the network. NBC Broadcasting
Network was a weak spot in the media arsenal of NBCUniversal when
Comcast acquired it last year. Due to relatively weaker
programming, the network was consistently falling behind its
competitors such as CBS (
), Fox and ABC. However, this has changed in the new season.
As far as the broadband business is concerned, there is no doubt
that Comcast will continue to demonstrate healthy subscriber
additions and revenue growth. This business is increasingly
becoming critical for Comcast and other cable companies. We
estimate that almost 25% of Comcast's value can be attributed to
Our price estimate for Comcast stands $41
, implying a premium of more than 5% to the market price.
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