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Not sure why there isn't a thread here on Comcast? 

 

Sky deal looks fairly interesting should Comcast be the successful bidder and get some use of Comcast's largely unlevered balance sheet.

 

Disney appears to be a stock deal and Comcast is all cash: likely they are paying the same price, perhaps Fox gives up more over time?

 

website for deal here: https://www.cmcsa.com/proposal-for-sky

deck here: https://www.cmcsa.com/static-files/dddc6229-b7c3-4e9a-94d6-ee82424f8709

 

thoughts?

 

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Not sure why there isn't a thread here on Comcast? 

 

Sky deal looks fairly interesting should Comcast be the successful bidder and get some use of Comcast's largely unlevered balance sheet.

 

Disney appears to be a stock deal and Comcast is all cash: likely they are paying the same price, perhaps Fox gives up more over time?

 

website for deal here: https://www.cmcsa.com/proposal-for-sky

deck here: https://www.cmcsa.com/static-files/dddc6229-b7c3-4e9a-94d6-ee82424f8709

 

thoughts?

 

Even if the Sky deal closes, it would represent a small fraction of the enterprise value of Comcast.  So, I have ignored Sky (and any potential Fox bid) for the time being and tried to look at the existing business.  It's quite a diversified business, so there's alot to try to wrap your head around (broadband/telco, cable networks, U.S. broadcast network, movie studio with some popular franchise IP, theme parks). 

 

With all the chatter here and elsewhere about Charter, the natural question I ask myself is whether the Comcast or Charter model is better.  I don't know the answer.

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Not sure why there isn't a thread here on Comcast? 

 

Sky deal looks fairly interesting should Comcast be the successful bidder and get some use of Comcast's largely unlevered balance sheet.

 

Disney appears to be a stock deal and Comcast is all cash: likely they are paying the same price, perhaps Fox gives up more over time?

 

website for deal here: https://www.cmcsa.com/proposal-for-sky

deck here: https://www.cmcsa.com/static-files/dddc6229-b7c3-4e9a-94d6-ee82424f8709

 

thoughts?

 

Even if the Sky deal closes, it would represent a small fraction of the enterprise value of Comcast.  So, I have ignored Sky (and any potential Fox bid) for the time being and tried to look at the existing business.  It's quite a diversified business, so there's alot to try to wrap your head around (broadband/telco, cable networks, U.S. broadcast network, movie studio with some popular franchise IP, theme parks). 

 

With all the chatter here and elsewhere about Charter, the natural question I ask myself is whether the Comcast or Charter model is better.  I don't know the answer.

 

I would not call Sky insignificant ($40B deal), nor from perspective of EBITDA: Sky might boost CMCSA Adj EBITDA (should the deal close) by roughly 10%. 

 

The difference between Charter/Comcast is indeed interesting.  If you look at Malone's personal assets, he owns both content and distribution. 

 

For whatever reason, he doesn't put them all under the same roof.

 

The question might be why Discovery, for example, isn't better served as an asset of Charter?  Is this a conflict that might make doing business harder for Discovery if it were owned by cableco?  NBC still runs on Spectrum...

 

Certainly as a Charter asset, Discovery would be a cheaper source of content or earnings would balance out some costs. 

 

Perhaps Malone anticipates breaking everything up and selling them all in pieces and as stand-alone businesses that's easier? 

 

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  • 2 months later...

Anyone have a handle on Comcast free cash flow this year with the boost from less cash taxes?

 

Looks like ~$15bln unlevered, ~$12bln levered

Thats where im at as well.  How much of the increase is due to cash taxes saved vs growth?

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  • 2 weeks later...

CMCSA results in Q2 should have laid many concerns about the impact if cord cutting to rest. I found the increase in FCF the biggest positive ( up 16% ) which is mostly due to less Capex going into set top boxes ( internet only customers only need a router, which is comparatively cheap and simple).

Leverage is only 2.1 x EBITDA or less than half!s CHTR. They can easily afford to buy SkY for cash and deleverage for 2-3 years and be back to 2x leverage.

 

I don’t have an idea either why they do not prefer to buy back stock for 7 x EBITDA rather than buying Sky for almost twice as much, but I think they either want to futureproof the company or have a plan to go big into Europe and possibly expand Sky into the US. I don’t know, but the owners of Comcast have shown strong skills in acquiring and growing assets, so I hope they get this right too.

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  • 5 months later...

I highlights parts of the last Comcast call in this thread, for those interested:

 

 

I agree results were quite strong, which hopefully also extends to CHTR. I am surprised how well NBC Universal is doing. I think they are at $8.6B EBITDA and were purchased from GE in a two step acquisition for $31B

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A significant chunk of that EBITDA has to come from investing in its Universal Studios Parks. They've been spending eye-popping amounts there.

 

https://www.latimes.com/business/la-fi-theme-park-economy-20160410-story.html

 

https://skift.com/2017/07/26/universal-has-more-in-store-for-harry-potter-as-theme-park-battles-rage/

was looking at 6 flags...wondering what capex vs deprec looks like...anyone have any ideas here re: universal studio parks? 

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  • 10 months later...

Stock is down today after a presentation for UBS. They apparently guided next year down a bit, because they will have  a bit more than $1B in additional expenses in Y2020 due to startup of Peacock (streaming service) and a broadband business in Italy (under Sky). My rough numbers are 8x EBITDA valuation and ~$3 in FCF/ share or a 7% yield. No stock repurchases next year as they will continue to delever the balance sheet (debt in the low 2.x EBITDA is their target).

 

Stock looks quite cheap to me,  but perhaps we get even better prices ina correction. I added a few more shares today (having sold off some in September). One of the cheapest GARP megacaps I am aware of.

https://www.cmcsa.com/static-files/6b32619a-749f-4ca7-aabb-39346192827b

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Stock is down today after a presentation for UBS. They apparently guided next year down a bit, because they will have  a bit more than $1B in additional expenses in Y2020 due to startup of Peacock (streaming service) and a broadband business in Italy (under Sky). My rough numbers are 8x EBITDA valuation and ~$3 in FCF/ share or a 7% yield. No stock repurchases next year as they will continue to delever the balance sheet (debt in the low 2.x EBITDA is their target).

 

Stock looks quite cheap to me,  but perhaps we get even better prices ina correction. I added a few more shares today (having sold off some in September). One of the cheapest GARP megacaps I am aware of.

https://www.cmcsa.com/static-files/6b32619a-749f-4ca7-aabb-39346192827b

 

I agree, I bought some in the low 30's but was stupid selling in the high 30's even though I believed it to be cheap.  Always tempting to take a very quick 25%.  And it's getting very tempting to get back in and definitely would with another 10% discount.  Your free cash flow estimate around 14 billion?

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Stock is down today after a presentation for UBS. They apparently guided next year down a bit, because they will have  a bit more than $1B in additional expenses in Y2020 due to startup of Peacock (streaming service) and a broadband business in Italy (under Sky). My rough numbers are 8x EBITDA valuation and ~$3 in FCF/ share or a 7% yield. No stock repurchases next year as they will continue to delever the balance sheet (debt in the low 2.x EBITDA is their target).

 

Stock looks quite cheap to me,  but perhaps we get even better prices ina correction. I added a few more shares today (having sold off some in September). One of the cheapest GARP megacaps I am aware of.

https://www.cmcsa.com/static-files/6b32619a-749f-4ca7-aabb-39346192827b

 

I agree, I bought some in the low 30's but was stupid selling in the high 30's even though I believed it to be cheap.  Always tempting to take a very quick 25%.  And it's getting very tempting to get back in and definitely would with another 10% discount.  Your free cash flow estimate around 14 billion?

 

Yes, the FCF estimate is ~$14B. basically EBITDA and FCF for Y2020 estimated were reduced by $1B because of aforementioned investments. I believe this caused the pressure on the stock.

 

I bought most of my shares around $32 in 2018 and sold some off at $45-47, now I bought those back at $42-43. I am inclined to further increase my position on weakness.

 

The stock doesn’t get much respect, even though it had been a great compounder historically.

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Stock is down today after a presentation for UBS. They apparently guided next year down a bit, because they will have  a bit more than $1B in additional expenses in Y2020 due to startup of Peacock (streaming service) and a broadband business in Italy (under Sky). My rough numbers are 8x EBITDA valuation and ~$3 in FCF/ share or a 7% yield. No stock repurchases next year as they will continue to delever the balance sheet (debt in the low 2.x EBITDA is their target).

 

Stock looks quite cheap to me,  but perhaps we get even better prices ina correction. I added a few more shares today (having sold off some in September). One of the cheapest GARP megacaps I am aware of.

https://www.cmcsa.com/static-files/6b32619a-749f-4ca7-aabb-39346192827b

 

I agree, I bought some in the low 30's but was stupid selling in the high 30's even though I believed it to be cheap.  Always tempting to take a very quick 25%.  And it's getting very tempting to get back in and definitely would with another 10% discount.  Your free cash flow estimate around 14 billion?

 

Yes, the FCF estimate is ~$14B. basically EBITDA and FCF for Y2020 estimated were reduced by $1B because of aforementioned investments. I believe this caused the pressure on the stock.

 

I bought most of my shares around $32 in 2018 and sold some off at $45-47, now I bought those back at $42-43. I am inclined to further increase my position on weakness.

 

The stock doesn’t get much respect, even though it had been a great compounder historically.

 

I agree again, it's been a spectacular compounder for 30 plus years and doesnt get their deserved respect, despite potentially being in their strongest position ever.  Are you saying that their current normalized fcf earning power is 15 billion?

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I agree again, it's been a spectacular compounder for 30 plus years and doesnt get their deserved respect, despite potentially being in their strongest position ever.  Are you saying that their current normalized fcf earning power is 15 billion?

Yes, the $15B normalized FCF is about correct. It’s clear that Comcast wants to offer multiple products to their customer - broadband, cellular (as an MVNO currently) and streaming service. Same in Europe where they offer Sky TV via satellite, streaming and also broadband in some countries (Italy being a new one).

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15B on 300B EV is ~5% yield. Not attractive for me.

 

I believe the $15bn is FCF so after debt service.  It's $15bn on equity value of $190bn which is pretty appealing given the growth opportunities and stability of those cash flows.

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15B on 300B EV is ~5% yield. Not attractive for me.

 

I believe the $15bn is FCF so after debt service.  It's $15bn on equity value of $190bn which is pretty appealing given the growth opportunities and stability of those cash flows.

 

FCF by definition is not after debt service.

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15B on 300B EV is ~5% yield. Not attractive for me.

 

I believe the $15bn is FCF so after debt service.  It's $15bn on equity value of $190bn which is pretty appealing given the growth opportunities and stability of those cash flows.

 

FCF by definition is not after debt service.

 

Normally FCF is Cash Flow from Operations (from the Cash Flow Statement) less Capex.  That's after debt service, after taxes and after working capital.  I haven't gone back in here to confirm that the $15bn number aligns to that definition but this isn't OCF, it's FCF.

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15B on 300B EV is ~5% yield. Not attractive for me.

 

I believe the $15bn is FCF so after debt service.  It's $15bn on equity value of $190bn which is pretty appealing given the growth opportunities and stability of those cash flows.

 

FCF by definition is not after debt service.

 

Normally FCF is Cash Flow from Operations (from the Cash Flow Statement) less Capex.  That's after debt service, after taxes and after working capital.  I haven't gone back in here to confirm that the $15bn number aligns to that definition but this isn't OCF, it's FCF.

 

You are right. I was thinking about something else, my bad.

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  • 1 month later...

So, CMCSA presented their Peacock streaming service today. It looks like they offer a mix of older shows, movies, live TV (news and sports) including the Olympics in either ad supported or without ads (charging $5/month more). Looks like a decent offering from a consumer perspective. I like that they cover the Olympics and my wife might appreciate the streaming news channel. Will likely subscribe to the premium service, at least for the duration of the Olympics. For us, it’s a better offering than Disney +.

 

As for Comcast, it’s not a make or break product like Disney + is for Disney, but rather a supplementary offering to keep both their content and cable business relevant.

 

https://www.cmcsa.com/static-files/0d39e63e-e9bc-4885-9345-0421ed299b37

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Once all these guys remove their content from Netflix we gonna be back to the balkanized cable channel universe where you have to sub to 5+ services to see everything you want.  :'(

 

I guess the only positive is that you can sub for couple months, binge watch, then unsub, then repeat.

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Guest cherzeca

OT but I wonder if the major networks could form a sports licensing sub/joint venture and bid as a group on all of the major sporting events, and run a specialized sports sub package.  antitrust issues will be present but there is a body of antitrust law that enables joint ventures, and I could see the consumer benefitting, which is the touchstone of antitrust law.  nothing prevents amazon/netflix/google etc from competing to win sports programming, but a combined espn/universal/fox sports programming venture should be successful...that would be a dynamite streaming offering for me....

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