Investors Wait for More NBCU information in Comcast Earnings
With the first quarter of 2011 in the books, some media investors are awaiting new details about NBCUniversal’s operations and finances from Comcast, which took control over the GE unit in January. GE provided less information about operations at NBCU than CBS, Disney or News Corp have disclosed to their investors. NBCU made up less than 10 percent of total GE sales in 2010, and was dwarfed by GE’s other business units in size. Accounting for Comcast’s 51 percent stake in NBCU, NBCU revenue will represent more than 20 percent of Comcast’s total sales, Sanford Bernstein analyst Craig Moffett wrote in a note to investors.
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Comcast said in its annual report that it plans to report results for five business segments -- Cable Distribution, Cable Networks, Broadcast Networks, Filmed Entertainment and Theme Parks. The next question is how detailed the information will be, said Dave Novosel, analyst with Gimme Credit. “Investors would like enough that you get a very good feel for, one, how NBCU did in the past year, and then, two, some more information regarding what we might expect for the quarters going forward,” Novosel said.
Analysts are starting to incorporate NBCU estimates into their projections for Comcast’s results. Moffett raised his price target for Comcast shares to $31 from $26, he said in a note to investors explaining how he’s incorporating NBCU results into projections. “While the extent and nature of integration challenges remain to be seen, the completion of this deal coincides with a relatively attractive backdrop for the NBCU assets, with an advertising tailwind continuing and with media multiples rising,” Moffett wrote. “We are still modeling the entity based on a vast number of assumptions,” he said. “1Q 2011 results should provide much more clarity on how the NBCU Assets will be reported going forward."
More data about NBCU operations will also provide insight into how quickly Comcast can buy the rest of NBCU from GE, said Miller Tabak analyst David Joyce. But it’s still not clear exactly how transparent Comcast will be about NBCU operations, he said. “I would like to think there will be more detail, but Comcast in the past has aggregated their cable networks’ revenue and operating cash flow, but provided their subscribing homes once a year,” he said. “More data will definitely be useful, so investors can place appropriate multiples on different businesses,” he said. Metrics about NBCU’s cash flow, revenue and gross margins are what investors covet most, Novosel said. And some may be looking forward into more information about how the broadcast network is performing, he said. “That might be on the wish list of some investors.” Comcast will report its Q1 earnings May 4.