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NBCUniversal owner Comcast may often be seen as a potential buyer of big media assets, but the bar to decide in favor of major acquisitions is high for management these days, CFO Michael Cavanagh told an investor conference on Tuesday.
Speaking at the virtual Bank of America Securities 2021 Media, Communications and Entertainment Conference, Cavanagh said that right now “the bar is really high for us to pursue outright acquisitions of any material size.” He added: “We got a great hand to play with what we have.”
While he noted that “we never say never,” Cavanagh noted that smaller “tuck-in” acquisitions in some areas, such as a recent deal in cable business services, are more likely to make strategic and financial sense for management.
When it comes to “outright” M&A, the Comcast CFO said, “I don’t see the need for it,” mentioning a recent agreement to form the SkyShowtime joint venture with ViacomCBS in more than 20 European markets to roll out a joint streaming service as an example how other approaches yield results.
Much Wall Street talk this year has focused on whether entertainment companies will need to look for more scale via deals after the Discovery-WarnerMedia merger announcement, including chatter about a potential NBCUniversal-ViacomCBS merger.
Addressing the Tokyo Summer Olympics, Cavanagh said on Tuesday: “We had a lot of challenges thrown our way, from no spectators to COVID challenges and the like.” Asked about advertising make-goods, he touted that the company had 1.2 billion minutes of viewing across all platforms, including linear, digital and social. The NBCU team was “able to use that, among other tools, to satisfy the expectations and the commitments we made to advertisers during the Olympics within the Olympics, which we feel good about,” he said.
What about the upcoming Winter Games? “We feel fine about the Beijing Olympics coming up, but it will have its share of COVID-related issues,” Cavanagh said.
The Comcast CFO also addressed Peacock, the streaming service of Comcast’s entertainment unit NBCUniversal. The conglomerate reported this summer that Peacock had ended the second quarter with 54 million signups in the U.S.
“Our road to streaming is going to be our own road,” he said. That is why the company recently struck deals for Universal Filmed Entertainment Group content to hit Peacock, beginning with the 2022 theatrical slate, in a redefined pay-one window. The deal includes an accelerated window that will bring titles exclusively to Peacock no later than four months following their theatrical debuts. The traditional 18-month pay-one window will be broken into three segments with titles available for the first and last four-month segments exclusively on Peacock. In between they will be available to licensing partners.
Cavanagh touted NBCU’s studios, saying “the power of our studios is incredible.” He added that it was “incredibly important to continue to feed that asset.” The windowing change “increases the value of that asset” and can increase overall demand for the studios’ content, he argued.
Cavanagh on Tuesday also called Universal Studios Beijing, the theme park in China that recently had a soft launch with its official opening set for Sept. 20, “fantastic.” Overall, “we are very confident that the legacy set of parks we have will get back top historic profit levels” after COVID,” the Comcast CFO told investors. In U.S. parks, “demand has been strong” just as is the case for per-capita spending despite “basically nil” international travelers visiting because of COVID.
In the core cable systems, where broadband services have driven growth, Cavanagh signaled that there was a slight deceleration in customer momentum as of late. “We are really proud about the performance of the broadband business and the cable business broadly through the last two years” and “feel really well positioned,” he said. But he noted that COVID has been a big disruption in various ways. “What we are seeing … at the tail end of August is a little bit of a slowdown in net adds,” he said.
Comcast previously said that broadband net additions for 2021 would increase over 2019 when Comcast recorded its “best quarterly net additions in total customer relationships” ever. On Tuesday, Cavanagh signaled third-quarter user net adds would come in behind the third quarter of 2019, but said Comcast still expects to be ahead of 2019 for the full year 2021.
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