Comcast Corporation President Mike Cavanagh attends the Allen & Company Sun Valley Conference on July 10, 2024 in Sun Valley, Idaho. T
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comcast’s Executives on Monday pulled back the curtain on the company’s failed bid. warner bros discoverydetailing offers that differ significantly from rival bidders.
Mike Kavanagh, Comcast’s president and soon-to-be co-CEO, laid out the details of the proposal and the company’s thinking at the UBS Global Media and Communications Conference on Monday, days after Comcast lost a bidding war for the Warner Bros. Discovery assets.
“When we looked at the situation with how everything went, … we didn’t anticipate that we had a good chance of winning a deal that was meaningful to us. We debated whether to be a nuisance. Do we want an upset? Do we want a distraction?” Kavanaugh said. “But this is our job. So we thought we might as well take a look, do the work, and see where it leads. You never know. And that’s what we did.”
Comcast etc. Netflixis bidding exclusively on Warner Bros. movie studios and the HBO Max streaming business. paramount skydance The offer was for the entire business, including its cable TV portfolio, which consists of networks such as CNN and TNT.
“We’re not interested in emphasizing Comcast’s balance sheet,” Kavanagh said Monday. “As a result, our offer meant it was cash light compared to other offers I had assembled.”
Last week, Netflix was named the winning bidder. On Monday, Paramount launched a hostile offer.
Comcast will offer “a significant stake in the combined entertainment company,” which will combine NBCUniversal with Warner Bros., which includes Universal’s theme parks and movie studios, as well as its broadcast network and streaming platform Peacock. Cavanagh talked about the studio and HBO Max.
As a result, the merger would have created a publicly traded subsidiary under Comcast’s control.
While this measure would benefit shareholders, it would not result in a complete spin-out and would require a complete separation of the two companies. Comcast’s NBCUniversal is in the midst of spinning out its portfolio of cable TV networks, including CNBC.
In contrast, Netflix’s proposed deal would consist of cash and stock, valued at $27.75 per WBD share. The transaction has an equity value of $72 billion and a total enterprise value of approximately $82.7 billion.
Paramount made an all-cash tender offer of $30 per share directly to WBD shareholders on Monday. This corresponds to an enterprise value of $108.4 billion.
“We clearly respect and understand the Warner Bros. board’s decision to prioritize a high level of cash and color stock certainty,” Cavanagh said.
Comcast executives have long said the hurdles for the company to pursue mergers and acquisitions are high.
“The good news is we like what we’re doing…and we’re going with a lot of focus, but I think we’ve gotten better as we go along,” Cavanagh said.
peacock’s desire
Macy’s Thanksgiving Day Parade, 2023: Birds of a Feather Stream in unison – Peacock Float
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Comcast’s NBCUniversal has transformed itself in recent years, from spinning out a cable TV network to focusing on expanding sports rights such as the NBA to increasing its theme park presence.
The company is also developing Peacock. NBCUniversal launched streaming play in 2020 and has been slowly growing ever since.
Peacock had 41 million subscribers as of September 30, which pales in comparison to HBO Max’s 128 million customers as of September 30 and Netflix’s more than 300 million customers by the end of 2024.
Kavanagh said Monday that if Comcast’s offer to Warner Bros. Discovery had been successful, “it would have been an interesting play.”
“Perhaps our streaming aspirations would have inevitably turned into global streaming aspirations,” he added.
Sports has been key to Peacock’s strategy to drive subscriber growth. NBCUniversal has tied exclusive NFL games to Peacock in addition to simulcasting the “Sunday Night Football” package from NBC’s broadcast network. Bringing the NBA back to NBC and having exclusive Peacock games was a big price to pay. The Olympics are also essential to that growth.
Live events such as the Macy’s Thanksgiving Day Parade are also contributing to increased viewership on television and streaming.
Peacock, like its peers, is also raising subscription prices. Peacock raised its prices again in July, just months before the start of the NBA season.
But unlike most of its competitors, Peacock has not yet reported a profit. For the quarter ended Sept. 30, Peacock reported a loss of $217 million, an improvement from a loss of $436 million a year earlier. Cavanagh noted Monday that Peacock’s earnings before interest, taxes, depreciation and amortization improved by $900 million over the subsequent 12 months.
Peacock’s losses are expected to “significantly improve” next year compared to 2025, with a “positive future trajectory” expected.
Disclosure: CNBC’s parent company, NBCUniversal, owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder for all Summer and Winter Olympics through 2036. Versant will become CNBC’s new parent company following Comcast’s planned separation of Versant.
