When NBC Universal deal is done, Comcast should go after Starz, analyst says
Comcast Corp. hasn't even officially closed on its deal to take control of NBC Universal yet, but a prominent media analyst says its time for the company to make its next move.
In a report released Friday morning, BTIG's Rich Greenfield said Comcast should buy the pay TV channel Starz from Liberty Media as a strike against Netflix and to compete against Time Warner's HBO and CBS's Showtime. He values Starz at $4.4 billion, but because $1.2 billion of that is cash on the company's books, the net cost to Comcast would be $3.2 billion.
Greenfield notes that the deal Universal Pictures has with HBO expires in a few years and he thinks that if Comcast owned Starz and shifted those movies there, it would build more value for the company. Starz currently has deals with Disney and Sony for their movies. Greenfield suggested that Comcast drop Sony and keep Disney because it has more family films.
While many industry observers think original content is a key component going forward because there are so many platforms for theatrical releases once they are done playing at the multiplex, Greenfield wrote that "we believe the value of movie content in the pay TV window will rise over the next few years" and added that while HBO gets acclaim for its original fare, movies "still represent the largest percentage of weekly viewership for the channel."
As for Netflix, Greenfield said Comcast could weaken them by buying Starz and then not renewing the deal that the pay channel has with Netflix when it expires next year. Comcast, he added, could use its new library of NBC Universal fare to try to create its own competitor to Netflix.
Comcast could, of course, try to start its own pay channel but Greenfield rightly points out that would take years to build, especially because no studio tie-in deals are opening up for a few years.
-- Joe Flint