Cable Technology Feature Article
Major Move in Television--Comcast Sells Stake in A&E
By Steve Anderson, Contributing TMCnet Writer
Comcast (News - Alert) owned roughly 15.8 percent of A&E, an investment worth just over $3 billion, but as of earlier today, that ownership is strictly past-tense as United States antitrust authorities have cleared the way for Comcast to sell that stake off. The stake is now in the hands of The Walt Disney (News - Alert) Company and Hearst Communications.
While under normal circumstances, such a deal would require a 30- day review period; the Federal Trade Commission granted the review period an early end, and the review period was concluded on Friday. Comcast exercised an option in the terms of the original deal which required Disney and Hearst to buy back the stock of A&E, and in return, gets around $1.95 billion in cash, as well as a note from A&E itself that's worth $1.072 billion.
The A&E networks, which include not only A&E, but also Lifetime, Biography, and the History Channel, offer a lot of the highest-rated programs showing on cable, which made them valuable properties indeed. Just recently, the History Channel had a major hit over the Memorial Day weekend with the miniseries Hatfields & McCoys, featuring fairly major names like Kevin Costner. Additionally, many popular series--Swamp People, Storage Wars, and more--are under some branch of the A&E banner. Thus, it's worth wondering just why Comcast sold off.
Since Hearst and Disney now represent a straight 50-50 split in terms of ownership of the A&E networks, it's easy to see why they wanted Comcast's stake, but less clear is why Comcast wanted out. It may be a simple function of cash need, as they work to develop their TV Everywhere programs and beef up their networks to address the growing online traffic. Yet even just as recently as early May, Comcast reports suggested gains of nearly 30 percent in the first quarter, and Comcast's second quarter looked to be big for gains as well.
While it's easy to Monday morning quarterback Comcast's divesting of its A&E stake--a stake in a chain of properties that are extremely valuable--it may well prove to be that there's more going on at Comcast than anyone cares to admit. They've had a lot of changes to make of late, and it could simply be that they wanted cash in the bank, up front, to better prepare for those changes. The rise of streaming video, the growing improvement in places like YouTube (News - Alert) and Netflix, and yes, even Hulu, is leaving the landscape irrevocably changed, and Comcast needs to prepare for that as much as anyone else. It will be interesting to see just what Comcast has in mind for its stake in the changing landscape, but it will take time to reach that point. Time and money, which now, they have plenty of.
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Edited by Brooke Neuman