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Comcast Invests in BuzzFeed, To Fortify Digital Media Hold

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Comcast Corp. (CMCSA - Free Report) is foraying into the lucrative digital media market for its future growth. Recently, NBC Universal, a subsidiary of Comcast invested $200 million in online social news site BuzzFeed. Notably, Comcast had put in $200 million in BuzzFeed last month.

NBC Universal stated that it aims to develop a partnership with BuzzFeed through collaboration on video, movies and advertising for multi-national corporates. The latest funding will let NBC Universal and BuzzFeed work more closely on ad sales. The endeavor intends to produce more short-form digital video for advertisers and then share it across social media.

The digital media brands are gradually gaining significant market traction especially among the younger generation. With the massive growth in demand for smartphones and tablets, this generation is increasingly watching videos online and discontinuing costly cable TV connections. BuzzFeed’s websites have over 200 million monthly viewers and its videos are watched by around 7 billion a month.

Last year, Comcast had invested $300 million in two parts in online media company Vox Media. This online media company boasts a portfolio of eight websites primarily focused on sports, politics, food, fashion and technology. The company’s brands include SBNation, Polygon, The Verge, Vox.com, Eater, Racked, Curbed, and Recode. NBC Universal stated that it aims to develop a partnership with Vox Media through collaboration on editorial content, advertising and technology.  

As the media sector has become intensely competitive, the large incumbent media companies are investing in small-sized media and distribution channels for the next-generation digital TV platform for their future growth. Comcast will utilize its partnership with BuzzFeed and Vox Media in its Watchable digital video platform.

Last month, The Walt Disney Co. (DIS - Free Report) invested $400 million in Vice Media and Discovery Communications Inc. and also put in $100 million in Group Nine Media. In Jun 2015, telecom giant Verizon Communications Inc. (VZ - Free Report) ventured into the online content business with the acquisition of AOL Inc., which owns websites like The Huffington Post, Tech Crunch, Engadget, Moviefone and MapQuest.

Comcast currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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