Comcast clearly craves content, but some analysts and investors think there are better companies to go after than NBC Universal.
Comcast followers worry that the cable giant is rushing into a deal with NBCU simply because it’s available. What Comcast wants most, the thinking goes, is NBCU’s cable channels and production studio — not the theme parks, broadcast network, or local television stations.
There are companies that could become available in the next 12 months to 24 months that would be a better fit, some say.
“If Comcast is willing to be aggressive and commit capital to the content business, then they should be looking at the full menu of properties, including Viacom, Time Warner, Scripps and Discovery,” said Gabelli & Co. analyst Chris Marangi. “Viacom has everything Comcast wants and none of what it doesn’t want.”
Miller Tabak analyst David Joyce said that Discovery and Scripps, which owns the Food Network, HGTV, DIY and other networks, “would be more interesting from a Comcast target perspective.”
Discovery and Scripps have enterprise values of $12 billion and $6 billion, respectively, and would be easier for Comcast to swallow than NBCU, which is valued at $30 billion.
Both offer a single class of shares, making a deal easier to structure. And while Liberty Media controls Discovery, Liberty boss John Malone can always be convinced to do a deal.
Though Time Warner is considered a buyer, there’s nothing to prevent Comcast from making an offer for the company. Time Warner, whose cable assets include TNT and TBS, also features a single-class share structure and lacks a controlling shareholder. Time Warner’s enterprise value would likely be a problem, however, at $46 billion.
Viacom, which counts MTV, VH1 and Comedy Central among its holdings, fits best with Comcast but presents the most obstacles. Chairman Sumner Redstone has a controlling stake in Viacom and has never indicated a willingness to sell. Viacom parent company National Amusements is next year facing a $1 billion debt payment that it might not be able to make, but Redstone could sell down his equity interest in the company, and even a portion of his voting interest, to finance the payment without losing control.
Viacom also has a $25 billion enterprise value, making it as costly as NBCU.
Still, Roberts is an opportunistic dealmaker, and sources said he thinks he can steal NBCU because parent company General Electric is essentially a distressed seller.