The ink isn’t even dry on Comcast’s acquisition of NBC Universal, but analyst Richard Greenfield of BTIG Research thinks it’s a good time for the cable company to buy Starz to complete its television portfolio.
In a new report, Greenfield makes several arguments for why adding Starz now would be good strategy.
First of all, Greenfield says: “Why license content to HBO? Keep it for yourself.” He thinks multi-platform access to pay TV will increase the value of content and that acquiring Starz would be a much less risky way of getting a pay TV channel.
Secondly, NBCU could “leverage Universal Studios TV production onto Starz,” Greenfield says. Universal could provide more of the original shows that increase the value of pay TV subscriptions to consumers and make it easier to market to distributors. At the same time, programming produced originally for Starz could be syndicated down through the company’s other cable channels and TV stations, creating more value for NBCU.
Thirdly: By buying Starz, Comcast and NBCU could “weaken Netflix by refusing to sell digital rights to Starz content,” according to the analyst. While cord cutting is not a meaningful phenomenon, Netflix’s 20 million subscribers is still big enough to be a concern, even to a giant like Comcast, and Starz is one of Netflix’s most important suppliers.
Bottom line: “While Comcast and NBC may not have the appetite to make an acquisition so soon after closing their transaction, time is of the essence as Starz is currently negotiating with Netflix. Pay TV is a missing piece within the Comcast NBC ‘empire’ and with HBO worth over $15 billion, there is real potential to build Starz’s asset value exponentially over the five years if owned by the ‘right’ company.”
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