Comcast CEO 'Bullish About NBCUniversal's Future,' NBC Turnaround

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Comcast is "bullish about NBCUniversal's future," Comcast CEO Brian Roberts said Wednesday in explaining why the cable giant decided to take full control of the entertainment company earlier than originally planned. He also reiterated confidence that NBC can continue its turnaround efforts.

The cable giant also detailed that the acquisition of full control of the entertainment company will add around $550 million in earnings, or 19-20 cents per share, for Comcast.

The comments came after late Tuesday news that Comcast has agreed to acquire the remaining 49 percent of NBCUniversal that it doesn't own yet for $16.7 billion. Comcast's stock jumped in after-hours trading, and Wall Street analysts raised their stock price targets, arguing that the deal would add to Comcast's earnings.

Roberts also called the deal and related announcements Tuesday a "very special moment for our company." Citing NBCUniversal's "strong momentum," he said "we now have a simplified structure" after concluding that two years after the original NBCUniversal deal the company's prospects are "even stronger and better than we first anticipated." Added the Comcast boss:  "In effect, we're buying stock in our own company and investing in businesses we know well."

NBCUniversal CEO Steve Burke and the NBCUniversal team "have had a very successful year" with improving performance at the broadcast business and elsewhere. "It's early in the turnaround," Roberts said, but he said that this season's stronger ratings momentum at NBC and the company's local TV stations "is driving a big swing in the momentum." He added: "Our programming investments are beginning to pay off at NBC and local stations."

Roberts said the company is also investing in its cable networks to strengthen their brands and boost carriage fees. He also cited the film unit's focus on reinvigorating film franchises and "strong growth across the theme parks" business. The latter will see an expansion of the current Harry Potter attraction and work on bringing it to the Hollywood as well, Roberts reiterated.

Asked about the biggest areas of upside potential for NBCUniversal, Burke cited continued growth at the theme parks, the "big opportunity" at the NBC, TV stations and Telemundo broadcast operations, as well as what he called a "monetization gap" in terms of able affiliate fees, retransmission fees and advertising rates compared to sector peers.

Asked about international growth opportunities, Burke said "there is plenty to grow organically" abroad -- a comment that signaled no need for international acquisitions.

Roberts also said that video subscriber trends in Comcast's cable systems continued to improve in the fourth quarter, reporting the ninth consecutive quarter of year-over-year improvement in subscriber momentum. Roberts said that the slight subscriber decline in the latest quarter would have become a subscriber gain if it hadn't been for damage related to Hurricane Sandy.

Asked if with the deal to take full control of NBCUniversal Comcast is now complete, Roberts said that "for content we have for many years thought it is a great business on a standalone business," but having both content and distribution assets "in one company makes us a really special company." He added that his team will find ways for the two to continue to work together and apart.

Comcast CFO Michael Angelakis on Wednesday was asked why the company got such an attractive price for the remaining stake in NBCUniversal, which came in below analysts' expectations. One analyst even asked if Comcast promised anything to seller General Electric. He replied that GE was happy to get paid for its NBCUniversal stake in one big payout now rather than later, calling the deal conditions good for both sides.

And Angelakis said that programming costs at Comcast's cable systems were up 7 percent in 2012, and that they will grow in the low double digit percentage range in 2013, followed by "modest" rate increases ahead. "We've planned for programming cost increases and think we can offset them with small price increases and efficiencies," he said.

 

Email: Georg.Szalai@thr.com
Twitter: @georgszalai
 

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