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Comcast Earnings: Streamer Rises, Studio Soars, But Is NBCUniversal A Buyer Or Seller?

Comcast enters 2024 with strong momentum for its streaming and studio subsidiaries, but the cable and internet giant has fundamental questions to address when it comes to the future of NBCUniversal.

Led by hits like The Super Mario Bros. Movie, Oppenheimer, and Five Nights At Freddy’s, Universal Studios won the global box office in 2023, ending Disney’s seven-year dynasty at the top. Universal has also won the domestic box office two years in a row.

Universal films have buoyed the company’s streaming efforts, as Peacock jumped ahead of Paramount+ in total catalog demand, which accounts for all movies and series available on a platform, for the first time ever in Q4 2023.

While Peacock is mired in eighth place in streaming originals demand, the platform is becoming a crucial hub for reality TV and sports. Peacock just delivered the first ever streaming-exclusive NFL Playoff game to a record-breaking audience, which led to millions of new sign ups. Whether or not Peacock has the ability to retain those new subscribers will be crucial to its future viability.

As the home of Bravo’s highly in-demand slate featuring Real Housewives and Vanderpump Rules, Peacock is a must have for reality TV fans. In fact, Peacock is second to only Netflix in US demand for unscripted streaming original series.

Comcast’s streaming dream thus lies with two primary assets: high octane clashes between bitter rivals with rabid and loyal fanbases, and also live sports.

Future of NBCUniversal

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With Netflix taking itself out of the running as a buyer of legacy media assets, Comcast may be best positioned to scoop up or join forces with a current competitor. CEO Brian Roberts has made high profile plays for both Disney and Fox in previous decades. Will the third time be the charm when it comes to Warner Bros. Discovery or Paramount Global?

Parrot Analytics’ M&A Cheat Sheets reveal that a combination of NBCUniversal’s assets with those of Warner Bros. Discovery would create an entertainment giant that leads the industry in corporate demand share and total catalog demand share, assuming Max and Peacock would fold into the same app. A combination with Paramount Global would be number one in corporate and number two in total catalog, but would be complicated by regulatory issues as both companies own broadcast networks.

However, Comcast must address a fundamental question in 2024: how long does it want exposure to linear TV in the first place? Is the company better off shipping NBCUniversal into a new company led by current WBD CEO David Zaslav?

This addition by subtraction could create a more nimble Comcast focused solely on broadband, which could lead the way in bundling different streamers into a more palatable platform for consumers via its Xumo business. Yes, insert your best ‘recreating cable on the internet’ joke here.

Even after vanquishing Disney at the global box office, this may be Comcast’s logical end game.

M&A Cheat Sheet: NBCUniversal & Warner Bros. Discovery

  • A hypothetical combination of these companies makes sense from a scale perspective — it would leapfrog Disney as the number one media company in corporate demand share and a combination of Max and Peacock would jump ahead of Netflix as the top platform in total catalog demand share.
  • Comcast should be able to fund this acquisition, especially after the recent selling Hulu stake to Disney. That said, WBD carries with it tens of billions of debt.
  • While WBD’s lack of a broadcast network could make this hypothetical deal more palatable than others, one major hurdle is dealing with CNN — it’s hard to imagine CNN and MSNBC/NBC News all under the same umbrella, and the possibility could incur heavy regulatory and political opposition.
  • While WBD CEO David Zaslav is well positioned to lead an entertainment company like this, it remains to be seen whether he would be willing to report to Comcast CEO Brian Roberts.

M&A Cheat Sheet: NBCUniversal & Paramount Global

  • NBCUniversal joining forces with Paramount Global would also leapfrog Disney as the number one company in terms of corporate demand share, albeit by a much slimmer margin than the NBCU-WBD combination.
  • The most obvious red flag to this merger is the fact that both companies own a Big Four broadcast network, and one would have to be spun off in order for the merger to go through.
  • It’s unclear what the company’s international strategy would be. Paramount+ and Peacock combined still only account for 6.8% of the global demand for streaming originals.
  • This merger would also give Comcast even more exposure to the shrinking linear TV business.

On-Platform Demand Share

  • While demand for original content drives subscription growth, library content is key for customer retention, an increasingly crucial element of all streaming strategies as consumers have more choice and easier ways to cancel than ever.
  • Peacock moved into sixth place for the first time ever in Q4 2023, jumping ahead of Paramount+, and trailing Disney+ by less than a percentage point.
  • This data shows the strength of Peacock’s movie slate, and access to next-day NBC broadcast series.

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