Analyst talks Comcast-NBC Uni deal

Moffet: 'We don't like the deal, but we do like the stock'

NEW YORK -- Sanford C. Bernstein analyst Craig Moffett is not a big fan of the Comcast-NBC Universal deal, but he has boosted his price target on the cable giant by $2 to $20.

"We don't like the deal, but we do like the stock," he said in the title of a report on Thursday that reiterated his "outperform" rating on the stock.

But he emphasized that he finds the shares "less compelling" than best-in-class pure-plays in content and distribution.

While the biggest media deal in a long time is "attractively structured," it is not value accretive in his view. "Net enterprise value has gone down, not up. All of the accretion to equity holders arises solely from Comcast's increased leverage."

But in another positive, the deal removes an overhang that has lingered for five years -- namely what Comcast will do with its cash. "Ironically, by buying content, their cable business now actually becomes a cleaner story, where, without further M&A, cash return will increasingly become the order of the day," Moffett said.

The Bernstein analyst also predicted that key benefits of the deal will be watered down by regulators. "We expect regulatory conditions to provide meaningful constraints on Comcast's ability to raise prices for its NBCU suite of channels relative to a stand-alone base case," Moffett argued. "As such, we believe this deal has negative synergies."
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