Comcast rings Mickey Mouse

Comcast, not satisfied with just being a pipe provider is chasing the elusive “convergence” and is attempting to buy Disney for $66 billion. This is clearly a dumb idea and bad timing. It looks like that bad marriage between my employers Time Warner and America Online. (Read open letter to Michael Eisner via WSJ)

Why is it a dumb idea? Well for starters, Comcast is still digesting the ATT Broadband acquisition, has to spend gazillions on the fast growing demand for broadband and at the same time trying to figure out how to fight off the defectors to the dish land.

Why is the timing bad? Because Disney has just lost its premier earnings growth engine – Pixar. The company is going to lose out to rivals in the highly lucrative animation market. Secondly, its other studios like Miramax are losing some of their fizz. In other words, if Brian Roberts waits for another 12-months, he could have himself a bargain. (Yeah Rupert is lurking around somewhere, but he has his own set of issues!) Roberts move is equally logic defying because the whole content business cannot deal with one thing – the digitization of content. Like Music, Movies and everything else is being reduced to bits-and-bytes. And that is a situation where it is very hard to make money.

Comcast reported its fourth quarter and 2003 numbers as well. Fourth quarter was profitable – net income came in at $383 million, or 17 cents a share, versus a loss $51 million, or three cents a share, in the same quarter 2002. Sales were $4.74 billion. For 2003, Comcast revenues were $18.35 billion, compared with $8.10 billion for 2002. “Financially, we are better positioned today than I thought possible at the beginning of this year,” Comcast President and Chief Executive Brian L. Roberts said in a press release.

But his focus should be cable broadband: in the most recent quarter, Comcast added 422900 high-speed Internet subscribers, and further more its penetration of “ready” homes rose to 15.2%, up from 14.5% for the same quarter a year ago.


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