NBC News, part of
)-owned NBC Universal, bought the remaining 50% stake in news
website company MSNBC Digital Network from
) for $300 million.
Both MSNBC channel and MSNBC Digital Network (popularly known as
MSNBC.com) was incepted in 1996, as a joint venture between
Microsoft Corporation and NBC Universal. The recent deal marks the
end of the 16-year old relationship between the two companies and
consequently MSNBC.com will be known as NBCNews.com.
Back in 2005, NBC Universal gained full control of MSNBC news
channel, but the popularity of the MSNBC brand had induced NBC
Universal to keep its name unchanged.
The acquisition of the remaining stake in MSNBC.com will not
only help NBC gain complete control over the digital business but
will also simplify things regarding management of both channel and
digital business, which in turn will boost the company's
advertising revenue going forward.
According to a research firm
), the MSNBC.com website was visited by 164 million users in May
this year, just behind
). We believe that such massive popularity of its website business
may attract more companies for advertising, thus resulting in
growth in that business.
At present, Comcast has nearly $2 billion of cash in hand.
Recently, the company announced its plans to sell 15.8% stake in
A&E Television Networks for $3.03 billion, which will further
improve its liquidity position. Therefore, we believe that payment
of $300 million to Microsoft will not be an issue for the
Moreover, it is also believed that the payment to Microsoft will
be made through the existing profit of MSNBC.com business, hence
giving the company more option to arrange for funds for the
Currently, we are maintaining our long-term Neutral
recommendation on Comcast. Comcast has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
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