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Comcast (CMCSA) in Talks to Acquire Free-Video Streamer Xumo

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Comcast Corporation (CMCSA - Free Report) is in advanced discussions to acquire Xumo Inc, a free, ad-supported streaming service owned by Panasonic and Meredith , per a Wall Street Journal report. The financial details of a potential pact were unavailable.

Xumo offers a range of free live and on-demand channels on more than 30 platforms, including Roku devices and smart TVs from Panasonic, LG, Vizio, Sanyo, Hisense and others.

Notably, the company inked a partnership with Xumo in 2019 to add the latter’s app to Comcast Xfinity TV set-top boxes.

Portfolio Strength to Aid Subscriber Growth

Comcast’s acquisition of Xumo is in line with its focus on offering superior content. The move is expected to aid the company in acquiring new video subscribers and retain its existing ones.

Xumo has a U.S. distribution footprint of more than 35 million households, with 5.5 million monthly active users as of the spring of 2019, per a Variety report. The company offers 90 different channels including newly launched music channels, stand-up comedy, sports, news coverage among others that span nine different genres.

Comcast Corporation Price and Consensus

 

Comcast Corporation Price and Consensus

Comcast Corporation price-consensus-chart | Comcast Corporation Quote

Live news from Cheddar from the New York Stock Exchange each morning and comedy from channels like FailArmy and JASH are included in the variety of channels offered.

Additionally, subscribers can stream game highlights and analysis from Sports Illustrated and Copa90. Family entertainment from PBS Digital Studios, Family Feud and American Idol are also available.

Moreover, Condé Nast Traveler and Bon Appétit channels are available for travel enthusiasts alongside viral hits from JukinVideo and style trends from Vogue, Refinery29 and more.

Recently, Comcast entered into a long term-agreement with Lionsgate Films (LGF.A - Free Report) . Per the deal, Lionsgate owned Starz network channels, which include STARZ premium channel as well as STARZ Encore channels, will continue to be available on Comcast NBCUniversal’s Xfinity TV platform with expanded distribution on the Comcast Flex platform.

The deal also allows NBCUniversal to license content from Lionsgate for Peacock, a premium subscription-streaming service, next spring. Peacock’s expanding content portfolio will improve Comcast’s foothold in the rapidly growing streaming market, which, per Grand View Research report, is expected to witness CAGR of 19.6% between 2019 and 2025.

Growth Prospects Amid Streaming War

The solid growth prospects of streaming have attracted prominent tech and media companies like Apple, AT&T and Disney to the space, which is already seeing intense competition among incumbents like Netflix, Hulu, Amazon and Roku.

Comcast’s interest in Xumo comes as the media conglomerate’s NBCUniversal is prepping the launch of Peacock. Xumo can provide technical and business support to Comcast's streaming efforts across Peacock and the parent's other divisions.

Moreover, Xumo TV also has contracts with LG and T-Mobile (TMUS - Free Report) to help power some of the content offered on LG TVs and smartphones. Buying Xumo TV will also help Comcast expand the reach of its content to LG TVs and smartphones.

Xumo, along with Pluto, Tubi and Chicken Soup for the Soul Entertainment, which owns Crackle and other AVOD platforms, has been one of the best-known brands in the growing ad-supported streaming space.

Xumo is smaller than Pluto TV, which was acquired by Viacom in January 2019. Pluto TV had 20 million U.S. monthly active users as of the fourth quarter of 2019, up nearly 70% this calendar year, per a Bloomberg report.

Nevertheless, Comcast is considering making the ad-supported version of Peacock free to everyone, per a recent CNBC report. That would mark a change from its original plan to offer the service free only to cable subscribers and Comcast broadband customers and is expected to aid subscriber growth.

Zacks Rank

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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