Shares of Comcast closed at a record high of $69.16 on Friday. At that price the Philadelphia-based cable, internet and entertainment giant is worth $165 billion on the stock market, more than half of the big companies that make up the Dow Jones 30 Industrials index. Valuable shares give Comcast a useful currency when it's time to buy more businesses.
The outlook is likely to get better for Comcast, as Republicans take over the White House and replace the leaders of the sometimes-combative Obama FCC board with regulators who approve of "coop-etition" among Big Media players, writes telecom analyst Amy Yong, in a report to clients of Australia-based Macquarie Securities (its U.S. stock-picking arm is based in Center City).
"Cable has the most to win," Yong writes, because its fiber-communications networks, WiFi deals and mobile "virtual-network" operator agreements are the easiest route for "fifth-generation" (5G) networks to speed two-way Internet (and Internet-of-Things) communications.
That reality is pushing the big phone and media companies to negotiate network access from Comcast and smaller cable providers. (The need to compete with cable is also feeding the scramble that has pushed CenturyLink to spend more than $30 billion on Level 3 Communications, and why Verizon is buying XO, and Windstream is buying EarthLink, Yong notes.)
Meanwhile, Comcast has arranged with Verizon "to launch a new multi-product bundle in mid-'17 featuring a wireless service," modeled on the successful smaller-scale Telenet/Virgin deal which has helped lock in customers of both those companies.
The Comcast-Verizon detente works both ways: for example, Comcast is offering its 15 million WiFi hot spots "to fill in gaps in Verizon's network."
See also recent "coop-etition" deals such as Comcast's integration of Netflix into its X1 network, and Comcast's pending distribution of Dish Sling TV's Blue and Orange networks into X1.
If all these giant partnerships don't prove profitable, Yong expects another wave of telecom mergers; maybe Comcast and Charter team up "to buy T-Mobile or Sprint;" or the Dish satellite network cuts a deal with Comcast or Verizon. Plus, the latest FCC spectrum auction will likely create further opportunities for new arrangements among the media giants.
A less-activist, Republican-led FCC and Justice Department may be less likely to block the remaining wireless phone companies from combining.
Just don't be too quick to count some of the usual deal suspects as sold before their time, Yong cautions: "Deutsche Telekom remains a happy owner of T-Mobile and is no hurry to rush" into a deal.
One thing she's not predicting: that another round of dealmaking among the media giants will cut prices for consumers anytime soon.
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