What Risks Threaten Comcast’s NBCUniversal Cable Network Segment?
Analyzing Growth Drivers and Threats for Comcast's NBCUniversal
Sports broadcasting rights
Comcast’s (CMCSA) NBCUniversal Cable Networks and Broadcast Television segment holds sports broadcasting rights for major sporting events including NFL (National Football League), NHL (National Hockey League), and NBA (National Basketball Association) games. If Comcast fails to secure sports telecasting rights, it could lose viewers and advertising revenues, as advertisers might not be willing to pay for advertising time slots in the event of low viewership.
But sports broadcasting rights are an expensive affair for media companies. As the chart below indicates, according to a PricewaterhouseCoopers report, the cost for sports telecasting rights is expected to rise at a compounded annual growth rate (or CAGR) of ~5.3% between 2015 and 2018. It’s anticipated to be $19.3 billion in 2018.
Currently, the market for sports broadcasting rights is quite competitive. Other major players in the market include Walt Disney’s (DIS) ESPN and 21st Century Fox’s (FOXA) Fox Sports.
Retaining creative talent
NBCUniversal’s Filmed Entertainment, Cable Networks, and Broadcast Television businesses rely on key creative and on-air personnel for its business operations. If the costs to retain such talent increases substantially, the company may not be able to retain key personnel, which could impact NBCUniversal substantially.
NBCUniversal International segment
NBCUniversal’s business segments’ international operations are susceptible to turmoil in the global economy, foreign exchange rate fluctuations, changes in local laws and trading regulations, and “inflationary pressures.”
Comcast makes up 0.94% of the iShares S&P 500 Growth Index (IVW). IVW has 3.0% exposure to the entertainment sector. IVW also has 2.6% of its holdings in Amazon (AMZN).
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