Comcast chief financial officer Mike Cavanagh addressed the elephant in the room at the JP Morgan virtual Technology, Media & Communications conference Wednesday, telling the audience that while the company will look at every opportunity, it doesn’t believe it needs to do a big merger deal to survive.
Cavanagh said that Comcast has the bandwidth to do deals and would look at any opportunity through a strategic lens. But he said there are other factors to consider, including whether an asset can be had for the right price, will add value and can help further execute the overall business strategy.
"Obviously, we know how to do that if necessary," Cavanagh said. "But hear me loud and clear: We like the hand we have, and M&A is not an answer. We like the hand we have without M&A, but we’ll obviously do what’s right for shareholders as time passes."
Cavanagh's comments come shortly after John Malone, who agreed to convert his super-voting shares in Discovery to facilitate the WarnerMedia deal, said that Comcast chairman and CEO Brian Roberts had considered merging with WarnerMedia but backed off because of regulatory concerns.
Analysts have wondered what effect WarnerMedia’s pending merger with Discovery will have on the rest of the business, and several have speculated that it could force companies like ViacomCBS, Comcast, Fox and Disney into looking for big deals. On Wednesday, Amazon said it would purchase movie studio MGM for $8.45 billion, a move that most likely wasn’t motivated by the Discovery deal. But the Amazon/MGM deal is another example of how even large streaming video providers feel they need more scale.
Comcast, which has about 42 million signups to its own streaming service Peacock, has been under some pressure from analysts who have speculated that spinning off its NBCUniversal programming business would unlock value. At the JP Morgan conference, Cavanagh didn’t talk about spinoffs, but said that making acquisitions doesn’t always lead to success.
"Just because you own something or buy it from the other guy, it doesn’t mean you’re going to operate it well," Cavanagh said. "So, we’ve been very focused on making sure when we acquire stuff, we do not take lightly the ability to operate well, execute well. And that’s critical if you’re going to go about it that way."
He added that M&A isn’t off the table, but there are other ways to gain scale, including partnering with other providers and investing in more content.
"We can do what we need to do in a variety of different ways--invest in content as it is appropriate, partner with other people in some markets as it’s appropriate, and certainly we can consider M&A," Cavanagh said. "But there are a whole host of things you’ve got to face up to if you’re going to go down that third route."
Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.
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