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Comcast Seeks to Grow on Global M&As, Market Opportunities

Leading cable MSO (multi service operator) and media and entertainment firm Comcast Corp.CMCSA foresees huge opportunities in the overseas market.

The company aims to boost its international operations by focusing on merger and acquisition (M&A) activities. In addition, Comcast is looking to cash in on the growth opportunities in the emerging markets of China, India and Latin America. Notably, strength in international markets helps media firms fend off woes like declining TV ratings and advertising issues.

Growth Story

Having acquired the entire stake in NBC Universal from General Electric Co., Comcast is leaving no stone unturned to revamp Universal Pictures amid intense competition. In 2014, revenues from the Filmed Entertainment segment of NBC Universal declined 8.2% year over year to $5 billion, reflecting lower theatrical and home entertainment revenues. Interestingly, this segment has already exceeded the full-year 2014 total revenue figure so far this year. This should naturally ramp up Comcast's top as well as bottom line for the year.

Moreover, for the first eight months of 2015, Universal Pictures' worldwide box office collection was roughly $6 billion, outpacing the previous record of $5.53 billion in full-year 2014 achieved by 20th Century Fox. Notably, both Jurassic World and Furious 7 grossed more than $1 billion at the international box office.

We expect the studio's strong business momentum to continue through the rest of 2015 and garner more international revenues for the company.

China on the Radar

In a bid to expand its business ties with China, Comcast's NBC Universal division - commonly known as NBCU - has signed a multi-year movie distribution deal with Alibaba Group Holding Limited BABA .

Per the deal, NBC Universal will distribute both new and old titles on Alibaba's new streaming service, Tmall Box Office (TBO). Universal Pictures' recent global hits Furious 7 , Jurassic World and Minions , which is set for a 3D release in China over the weekend, are all part of the deal. Interestingly, Furious 7 and Jurassic World made almost $400 million and $230 million, respectively, at the Chinese box office.

Meanwhile, Comcast has been pouring money into its theme park business for future growth. Likewise, NBC Universal is constructing a $3.25 billion park in Beijing, in partnership with a consortium of Chinese companies, which is slated to open in 2019.

Expansion in Europe

Moreover, Comcast and Liberty Global Plc. LBTYA have formed an alliance to offer the industry's first international WiFi roaming connectivity. The cross-continent WiFi interoperability will provide a free alternative to wireless data roaming facility.

The Bottom Line

Though NBC Universal presently collects roughly 20% of its revenues internationally, the deal with Alibaba should give a boost to the company's plans to expand its businesses overseas. Moreover, the partnership will aid the company to amplify its reach and garner more traction in the market, as well as drive international revenues.

Thus, with its latest endeavors, Comcast aims to catch up with rival media moguls like The Walt Disney Company DIS and Twenty-First Century Fox, Inc. FOXA .

Further, Comcast is interested in attaining additional live sports content and is also looking to invest in new content to target the youth keeping in mind the shift to Internet-based video viewing habits.

Comcast currently has a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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