Roberts Downplays M&A Desires

Says may be ways to create value, but Comcast remains disciplined
Author:
Publish date:
Social count:
0
BrianRoberts_RESIZED.jpg

Comcast stock surged in early trading Wednesday after chairman and CEO Brian Roberts vaguely hinted at M&A opportunities ahead, but quickly retreated after the market realized the cable leader will focus more on organic growth.

Comcast shares rose to a new 52-week high of $43.40 per share in early trading Jan. 24, up 2.3% or 96 cents per share and beating the old mark of $42.90 each. By 11:15 the stock was in the $42.50 range.

Related: Comcast Sheds 33K Video Customers in Q4

Driving the earlier gains were a commitment to buyback about $5 billion of its own shares this year, a 21% lift in its annual dividend and the whisper of a hint by chair and CEO Brian Roberts that the media giant will continue to look at merger and acquisitions opportunities in the space.

On a conference call with analysts to discuss Q4 results, Roberts made a veiled reference to other recent deals, including The Walt Disney Co.’s pending $66.1 billion purchase of certain 21st Century Fox assets.

“With the pace of change in the industry accelerating, many of our peers are reevaluating their strategies, as we’ve seen recently,” Roberts said on the call. “So along the way there may be ways for us to create more value for our shareholders, like we did with NBC Universal.”

Related: NBCU Reports Higher Q4 Profit on Cable Gains

He added that shareholders shouldn’t be surprised that the company looks at every opportunity that comes along. 

“But the bar is set high, and we have been and will remain disciplined,” Roberts continued, adding that the priority is to focus on organic growth. 

Comcast hasn’t been a wallflower in the M&A race, but it has definitely been disciplined. Although its biggest recent deal was its purchase of 51% of NBC Universal in 2011 (it took in the rest two years later), it purchased DreamWorks Animation in 2016 for about $3.8 billion and was in the running for the Fox assets, dropping out in December, less than a week prior to Disney announcing its deal. 

Comcast also abandoned its pursuit of Time Warner Cable in 2015 after it determined it would not receive regulatory approval for the deal. 

While the current presidential administration is believed to be more deal friendly, its stance on deals has been mixed at best. Whether Comcast would attempt to make a big splash on the deal front, especially since it’s not one of President Trump’s favorites, remains to be seen.

Later, Roberts tempered his remarks, adding that Comcast does not need to pursue a deal.

“There is nothing we feel we have to acquire,” Roberts said, offering the company’s concentration on broadband after it noticed a shift in viewing habits and its emphasis on theme parks after buying NBCU as examples.

“Let's leave it at that for now; it’s the kind of thing we will talk about over time,” Roberts said, adding that some analysts have predicted a coming restricting in the industry. “Let’s see if it all plays out that way. There will be more information in the quarters ahead."

For the fourth quarter Comcast lost about 33,000 total video customers, better than some analyst estimates but behind the gains of last year. Broadband subscriber growth also slowed a bit, to 350,000 in the quarter, compared to a gain of 385,000 in 2016.    

Related