Tag Archives: cmcsa

Comcast Could Gain In China With DreamWorks Acquisition

Amid growing regulatory headwinds on the cable TV side of its business, Comcast ( CMCSA ) might again build up its content side by acquiring movie studio DreamWorks Animation ( DWA ). DreamWorks stock surged 17% in afternoon trading on the stock market today on multiple reports that Comcast is in talks to acquire the movie studio. Comcast did not comment on the DreamWorks speculation during its Q1 earnings conference call early Wednesday. Comcast posted Q1 earnings and revenue that topped views, as the cable TV firm added 53,000 video subscribers. Comcast owns NBCUniversal, where filmed entertainment revenue slipped 4.3% in Q1 vs. the year-earlier quarter, after surging 46% in 2015. Comcast is in talks to pay $3 billion or more for DreamWorks, according to reports in the Wall Street Journal and other media outlets. Aside from producing movies, DreamWorks has been creating original content for Web video streamers Netflix ( NFLX ) and Amazon.com ( AMZN ). DreamWorks owns AwesomenessTV, which develops shows for millennials, young adults ages 18 to 34. Verizon Communications ( VZ ) in early April acquired a 24.5% stake in AwesomenessTV for $159 million. One looming question is whether Verizon and its content partner Hearst hold rights to buy the remainder of AwesomenessTV if DreamWorks is sold to a competitor such as Comcast. “We have not made the terms of the agreements public,” a Verizon spokesperson told IBD. DreamWorks’ most popular movie franchises include “Shrek,” “Kung Fu Panda ” and “ How to Train Your Dragon.” There’s optimism, analysts say, for the upcoming “Despicable Me 3” and “The Secret Life of Pets.” DreamWorks has expanded into China, a key market for Comcast.  NBCU’s “Fast and Furious 7” movie last year grossed $400 million at the box office in China. Comcast, DreamWorks Both Building In China With Local Investors Comcast-NBCU is building a $3.3 billion theme park in Beijing with local investors. It’s slated to open in 2019. The Oriental DreamWorks movie studio, meanwhile, is building a new headquarters and entertainment center in Shanghai with local partners. While not commenting on interest in DreamWorks on Comcast’s Q1 earnings call, NBCU Chief Executive Steve Burke said that China “represents a big, big opportunity for the company.” “It already is a significant profit generator,” Burke added. “I think we’re doing all the things that you would expect us to do. (We) have a lot of big movies coming out in China in the next year and want to make sure that we’re doing everything we can to grow that market as aggressively as possible.” Comcast acquired NBCU from General Electric in 2011. For Q1, Comcast said cable TV revenue climbed 6.7% to $12.2 billion, while NBCU revenue rose 3.9% to $6.86 billion. NBCU’s theme park revenue jumped 57% to $1.02 billion. Comcast stock was up a fraction Wednesday afternoon, above 61, and it’s risen nearly 9% in 2016 despite facing regulatory headwinds. Cable TV firms have been squabbling with the Federal Communications Commission over broadband privacy issues as well as the agency’s plans to open up the set-top box market  to more competition. The Department of Justice on Monday cleared  Charter Communications ’ ( CHTR )  purchase of Time Warner Cable ( TWC ), and the FCC moves closer to granting its approval. Charter would be the No. 2 cable TV firm, behind Comcast. Charter will not be allowed to impose usage-based pricing or data caps on broadband customers for seven years as part of proposed conditions on the TWC deal. Whatever conditions Charter agrees to might set the bar for Comcast down the road, analysts say. Regulators thwarted Comcast’s acquisition of TWC in April 2015. Some analysts speculate that Comcast could buy a wireless firm, such as T-Mobile US ( TMUS ), if mobile video competition heats up. Comcast has filed to be a possible bidder in a government auction of radio spectrum owned by local TV stations that began in late March. Comcast said that its Q1 earnings, excluding items, rose 7% from the year-earlier quarter to 87 cents per share, while revenue increased 5.3% to $18.8 billion. Analysts had modeled EPS of 79 cents and revenue of 18.64 billion. Comcast’s video customer additions represent a swing from a loss of 8,000 in Q1 2015. It marked its most video subscriber additions in nine years. Comcast added 438,000 broadband subscribers, up from 407,000 in Q1 2015.

Why Comcast May Covet DreamWorks For China, Millennial TV Content

Comcast ’s ( CMCSA ) interest in acquiring DreamWorks Animation ( DWA ) likely goes beyond movies and stretches to content for Web TV streaming services, especially programming targeted at millennials. In addition, both DreamWorks and Comcast, which owns NBCUniversal, have been expanding in China. Comcast has been racing against  Verizon Communications ( VZ ) to make investments in original content for millennials, aged 18 to 34. Millennials spend more time watching Netflix ( NFLX ), Alphabet ‘s ( GOOGL )  YouTube and social video on Facebook ( FB ) than they do viewing traditional TV, according to studies. DreamWorks stock surged 18% to 32, hitting a two-year high, in midday trading in the stock market today on reports that Comcast is in talks to acquire the movie studio. Comcast did not directly comment on the DreamWorks speculation during its Q1 earnings conference call early Wednesday. “DreamWorks has a robust TV business, owns (millennial-focused) AwesomenessTV and has access to China via DreamWorks Oriental,” said Stan Meyers, a Piper Jaffray analyst, in a research report. “Comcast management has discussed launching a number of (Internet video) services, so we believe teaming up with DreamWorks would provide access to exclusive content.” Verizon in early April acquired a 24.5% stake in DreamWorks’ AwesomenessTV for $159 million. Both Comcast and Verizon have been pursuing original content for millennials, a demographic coveted by advertisers. Benjamin Mogil, an analyst at Stifel, says Comcast is likely eyeing a few DreamWorks assets. “China operations, which Universal could likely expand, is likely one area of focus,” wrote Mogil in a report. “On the Awesomeness TV front, we see the ability to carve out a window outside of Verizon’s mobile window for such content on a cable video-on-demand service, which would be attractive for Comcast.” DreamWorks’ current films include “Kung Fu Panda 3,” while its earlier box office hits include “Shrek” and “How to Train Your Dragon.” DreamWorks has also been developing TV shows for video streaming services. Customers include Netflix and Amazon.com ( AMZN ). NBCU owns cable channels including USA Network, SyFy and Bravo. Amid falling audience ratings, the cable channels also need better original content to compete with Web streaming services, analysts say. Aside from Universal Films, Comcast owns Focus Features and Illumination Entertainment, the latter of which developed the “Minions” movies. NBCU’s filmed entertainment revenue jumped 46% to $7.3 billion in 2015, thanks to the box office success of “Minions,” “Jurassic World,” “Furious 7” and “Fifty Shades of Grey.” NBCU’s film and entertainment revenue, however, fell 4.3% in Q1, to $1.38 billion.

Akamai Revenue Guidance Light Amid Concern Over Apple, Facebook

Akamai Technologies ( AKAM ) late Tuesday reported Q1 earnings and revenue that topped expectations, though its current-quarter revenue guidance slightly missed Wall Street expectations. Still, Akamai stock was up 7.5% in early trading in the stock market today , touching a four-month high of 57.50. Cambridge, Mass.-based Akamai is the biggest provider of content delivery network (CDN) services. Worries that customers such as Apple ( AAPL ) and Facebook ( FB ) are shifting some of their data traffic to their own CDNs has pressured Akamai stock, and analysts have lowered Q1 estimates. Akamai said Q1 EPS ex items rose 8% to 66 cents per share, with revenue also rising 8% to $567.7 million. Analysts polled by Thomson Reuters had modeled 63 cents and $564 million. For Q2, Akamai forecasts revenue of $574 million at its midpoint of guidance and adjusted profit of 62 cents to 65 cents per share vs. consensus estimates of $578.4 million and 65 cents. “Revenue guidance is slightly under consensus, due to year-over-year decline in revenue from two major media delivery customers (Apple and Facebook) that are taking more of their volume in-house,” Michael Olson, a Piper Jaffray analyst, said in a research report. “Importantly, the impact from these customers is becoming less material as they go from 11% of revenue in 2015 to around 6% in 2016.” Colby Synesael, an analyst at Cowen & Co., says Akamai’s guidance might be too conservative. “While we appreciate management’s decision to err on the side of being overly cautious after its surprising revelation regarding these two customers on its Q3 (2015) call, it highlights management’s lack of visibility with its own top customers,” he said in a report. Akamai competes with  Level 3 Communications ( LVLT ) and  Limelight Networks ( LLNW ), as well as startups Fastly and CloudFlare.  Verizon Communications ( VZ ),  Amazon.com ‘s ( AMZN ) Amazon Web Services,   IBM ( IBM ) and  Comcast ( CMCSA )  are also emerging as new rivals in some parts of the CDN market. “Akamai has been very clear that the first half of 2016 would be marked by slower growth in the media segment, but then it expects (Internet TV) video to begin to accelerate growth. Similar to other large, secular growth opportunities, it is often difficult to project the exact timing of the opportunity, but we believe growth from (Internet TV) will begin to manifest in second half 2016,” said Michael Bowen, an analyst at Pacific Crest Securities, in a report.