Real estate mogul and reality star-turned Republican presidential frontrunner, Donald Trump recently announced that he has settled a pending lawsuit with Comcast Corp. (CMCSA - Free Report) by acquiring the remaining 50% stake of the Miss Universe Organization from NBC Universal. However, the financial terms of the deal have not been disclosed. Notably, NBC Universal is the media division of Comcast, acquired from General Electric Co. (GE - Free Report) .
The Miss Universe Organization, which conducts the “Miss Universe” and the “Miss USA” pageants every year, was jointly controlled by Donald Trump and NBC Universal. However, the relationship between Trump and the media company turned sour after Trump made controversial remarks about Mexican immigrants in the U.S., stoking widespread outrage. Soon after this, NBC Universal cut its ties with Trump and dropped plans to broadcast the beauty pageant contests.
The U.S. Hispanic TV market is highly lucrative and is growing at a remarkable pace. Comcast runs Spanish-language TV network “Telemundo”. Comcast may have been prompted to take the decision of not telecasting beauty pageant shows, fearing a backlash on the channel, int he context of Trump’s comments.
In the same vein, Univision Communications Inc., which commands the largest Spanish-language broadcast TV network in the U.S., also decided not to broadcast these beauty contests on their network. Univision is partially controlled by Mexican cable MSO - Grupo Televisa S.A. (TV - Free Report) .
Ever since it acquired a 100% stake in NBC Universal from General Electric, Comcast has been striving to revamp the media company to gain competitiveness. The two major growth areas of NBC Universal are its film production unit - Universal Pictures and its theme park business. The company is also restructuring its MSNBC news channel to re-establish its brand value.
We believe the disinvestment of the remaining half of stake in the Miss Universe Organization is part of Comcast’s strategy to modify NBC Universal’s business model to ultimately serve its long-term growth objective.
Comcast currently carries a Zacks Rank #3 (Hold). A better-ranked stock is this industry is Cable ONE Inc. (CABO - Free Report) with a Zacks Rank #1 (Strong Buy).
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