Back to top

Image: Bigstock

Will Comcast (CMCSA) Offer Nationwide Online TV Services?

Read MoreHide Full Article

Leading cable MSO (multi service operator) and media and entertainment firm Comcast Corp. (CMCSA - Free Report) has gained the rights to offer online TV services nationwide from several unnamed cable networks, as per a recent Bloomberg report. The cable MSO reportedly got the rights using the ‘most favored nation’ clauses in its contracts. This allows Comcast to sell its video services for the first time outside its regional territories to new cities like New York and Los Angeles.

This marks Comcast’s foray into online streaming TV services, thus diversifying its range of offerings. Also, Comcast is gearing up to compete against the likes of AT&T Inc.’s (T - Free Report) DirecTV Now, DISH Network Corp’s Internet TV service called Sling TV and Sony Corporation’s Playstation Vue.

However, nothing has been confirmed by the cable MSO as yet. Rather, the company is still focused on gaining cable-TV subscribers from its traditional cable TV service markets. Comcast’s Cable business is pretty well poised, as evident from its last reported quarterly results.

Meanwhile, Comcast is yet to renegotiate its long-term deals with some of its major partners like CBS and ESPN to acquire nationwide over-the-top (OTT) rights. The company last negotiated an extension with CBS in 2010 and with ESPN in 2012.

Price Performance

Comcast underperformed the Zacks-categorized Cable Television industry over the past three months. The company’s shares rallied around 6.3% compared with a roughly 8.4% gain for the industry over the same time frame.

We can trace the underperformance back to an intensely competitive and consolidative U.S. pay-TV industry.  Charter Communications Inc.’s (CHTR - Free Report) twin buyout of Time Warner Cable and Bright House Networks has heightened competition in the industry. The consolidation trend among telecom and cable TV operators has also put more competitive pressure on the company.

If the proposed acquisition of Time Warner Inc. by AT&T goes through, the combined entity will give direct competition to Comcast in terms of media business as well. Notably, AT&T will be in a face-off with Comcast in the wireless segment as the latter announced plans to enter the wireless service business in 2017.

Mounting programming expenses and operating costs as well as a debt laden balance sheet are the other near-term risks for the company.

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

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


AT&T Inc. (T) - free report >>

Comcast Corporation (CMCSA) - free report >>

Charter Communications, Inc. (CHTR) - free report >>

Published in