With Peacock unable to establish serious scale on its own, Comcast is considering major acquisition(s), with potential targets including Roku and ViacomCBS, the Wall Street Journal reports.
According to the report, Comcast chief executive Brian Roberts has told people close to him that he doesn't "feel" that Comcast necessarily "needs" a merger to compete. The company plans to up the $2 billion it planned to spend on Peacock content in the first two years following the streaming platform's July 2020 national launch
Notably, the company's own streaming service, Peacock, has fewer than 10 million paid subscribers after nearly a year on the open market. This is a tough number to swallow given that Netflix, which has more than 200 million subscribers globally, has set the bar for what counts as global scale.
Comcast is also facing a tough climb with an initiative internally known as PlatCo, whereby it's partnering with Walmart and Chinese electronics company Hisense to make smart TVs powered by the cable giant's Xfinity Flex connected TV platform, which could hit stores later this year. Comcast will have to run down highly rooted companies including Roku, Amazon and Google to win that race.
And potential deals are being looked at.
Comcast has dismissed the report to other news platforms seeking to confirm it as "speculation." Roku and ViacomCBS haven't commented, but both companies saw stock price increases in late-day trading Wednesday after the WSJ report.
Roberts is said to be under pressure from activist investors. Trian Fund Management LP is said to have found Comcast undervalued, and it has questioned the structure of housing content and distribution under one roof.
Trian Fund also suggested that Comcast isn't invested enough in the streaming business.
Distribution is strong. Comcast grew its broadband revenue by 10% to nearly $21 billion in 2020, as the customer ranks surged by nearly 2 million in the pandemic.
In the WSJ, media-tech mogul Barry Diller came to the defense of Comcast's blending of cable distribution infrastructure and NBCU content creation, stating “I think anyone who would advocate against that [strategy] today is, in addition to everything else, a Luddite."
All of this points to a future in which a merger, carefully considered in Roberts' notoriously rigorously thought-out style, is the more likely option than, say, Comcast divesting NBCU.
Reportedly, Roberts considered WarnerMedia a suitable match, but didn't want to make the first move. The company recently was merged by AT&T with Discovery Inc.
That leaves Roku, which saw its market capitalization sour past $56 billion Thursday morning, and ViacomCBS, which is now valued at $27.6 billion.
