Comcast Corporation Chairman Mike Cavanagh attends the Allen & Company Sun Valley Conference July 10, 2024 in Sun Valley, Idaho. T
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Comcast Top brass on Monday pulled back the curtain on the company’s unsuccessful bid for Discovery of Warner Bros.detailing an offer very different from that of its competitors.
Mike Cavanagh, Comcast’s chairman and soon-to-be co-CEO, explained the details of the proposal – and the company’s thinking – at the UBS Global Media and Communications Conference on Monday, just days after Comcast was eliminated from the bidding war for Warner Bros. assets. Discovery.
“When we looked at the circumstances under which all of this happened…we didn’t expect to have a strong chance of prevailing with a deal that made sense to us. We debated whether we should care or not. Do we want the disruption? Do we want the distraction?” Cavanagh said. “But it’s our job, so we thought we’d better take a look at it, do the work and see where it goes. You never know. And that’s what we did.”
Comcast, like Netflixbid only on Warner Bros. film studio. and the HBO Max streaming business. Paramount Skydance The offer was for the entire business, including the cable TV portfolio of networks like CNN and TNT.
“We don’t want to stress Comcast’s balance sheet,” Cavanagh said Monday. “As a result, that meant our proposal was light, compared to other proposals, from what I understood, in cash.”
Last week, Netflix was named the winner. On Monday, Paramount launched a hostile bid.
Comcast offered “a significant stake in a combined entertainment company,” which would have brought NBCUniversal — including its Universal theme parks and movie studio as well as its Peacock broadcast network and streaming platform — together with Warner Bros. studio and HBO Max, Cavanagh said.
The resulting combination would have been a controlled and publicly traded subsidiary of Comcast.
This vehicle would provide returns to shareholders, but would not constitute a complete spin-off, which would have involved a complete separation of the companies. Comcast’s NBCUniversal is in the process of spinning off its portfolio of cable TV networks, which includes CNBC.
In contrast, Netflix’s proposed transaction includes cash and stock, valued at $27.75 per WBD share. The net value of the transaction is $72 billion, for a total enterprise value of approximately $82.7 billion.
Paramount went directly to WBD shareholders on Monday with an all-cash tender offer, at $30 per share, equating to an enterprise value of $108.4 billion.
“We respect and understand the decision of the Warner Brothers board to obviously prefer the certainty of high levels of liquidity or secure shares,” Cavanagh said.
Comcast executives have long said the bar is high for the company when it comes to mergers and acquisitions.
“The good news is we love what we do…and we continue with a lot of focus, but I think we’re better after taking a look at it,” Cavanagh said.
Peacock aspirations
Macy’s Thanksgiving Day Parade, 2023: Birds of a Feather Flow Together – Peacock Float
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Comcast’s NBCUniversal has been shape-shifting in recent years — from building out its cable TV networks, to focusing on beefing up sports rights like the NBA, to boosting its presence in theme parks.
The company also developed Peacock. NBCUniversal launched its streaming game in 2020 and it has slowly grown since then.
As of September 30, Peacock had 41 million subscribers, which pales in comparison to HBO Max’s 128 million customers as of September 30 and Netflix’s more than 300 million customers at the end of 2024.
Cavanagh said Monday that if Comcast’s offer for Warner Bros. Had Discovery been successful, “it would have been an interesting play.”
“It probably would have changed our streaming aspirations to global aspirations out of necessity,” he added.
Sports played a key role in the playbook to fuel Peacock’s subscriber growth. NBCUniversal has assigned exclusive NFL games to Peacock in addition to simulcasting its Sunday Night Football package from NBC’s broadcast network. It paid off big time to bring the NBA back to NBC, with exclusive games for Peacock as well. The Olympics also played a vital role in its growth.
Live events such as the Macy’s Thanksgiving Day Parade have also helped increase viewership on television and streaming.
Peacock also increased its subscription price, following the example of its peers. In July, Peacock raised its prices again, just months before the start of the NBA season.
Unlike most of its competitors, however, Peacock has yet to report a profit. For the quarter ending September 30, Peacock reported losses of $217 million, a $436 million improvement in losses from the same period last year. Cavanagh noted Monday that Peacock improved its earnings before interest, taxes, depreciation and amortization by $900 million over the past 12 months.
Peacock’s losses are expected to “significantly improve” next year compared to 2025, with “a trajectory towards a positive future.”
Disclosure: NBCUniversal, parent company of CNBC, owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder for all Summer and Winter Games through 2036. Versant would become the new parent company of CNBC following Comcast’s planned spinoff of Versant.