Comcast vs. Cord-Cutters

09/30/2015 8:00 am EST


Ari Charney

Analyst and Associate Editor, Canadian Edge and Personal Finance

Network industries such as cable are not normally known for being deft at expanding into new markets, suggests Ari Charney, editor of Utility Forecaster.

Comcast Corp. (CMCSA), however, is breaking the mold by bringing TV, broadband Internet, telephone, and content together in innovative ways, stealing market share from competitors and boosting growth as a result.

The company is best known for its cable business, which is the second largest in the industry, reaching 22 million households in the US.

Cable accounts for nearly two-thirds of Comcast’s consolidated revenue and three-quarters of earnings.

Comcast has leveraged this extensive network to become the largest home Internet provider in the US, as well as the third-largest home telephone service provider.

The proliferation of services streaming media over the Internet means that consumers are no longer dependent on cable to catch their favorite shows.

Younger consumers, in particular, are increasingly cutting the cord by canceling their cable service.

But Comcast is addressing this threat by developing new capabilities, such as its X1 platform, which gives TV viewers customization and on-demand functionality.

More important, Comcast’s acquisition of NBCUniversal in 2011 allowed it to shift from merely being a content distributor to being a content creator.

This will prove crucial in the coming years as consumers are no longer tethered to any one device for viewing media.

Comcast’s seemingly paltry forward yield of 1.7% masks stunning dividend growth of 22% annualized over the past five years. Comcast is a buy below $70.

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