Comcast Spends More On Marketing Than Peers But It Does Little For The Stock

June 20th, 2012 by Trefis Team
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Comcast (NASDAQ:CMCSA) spent over $480 million in marketing its Xfinity brand in Q1 2012, making it one of the highest marketing spenders in the U.S. [1] This represented an increase of 4.3% compared to same period last year. [1] Even though the company may be one of the biggest advertising spenders in the U.S., the increase in advertising spend is not significant compared to its revenue and overall expense growth.

This implies that not a lot has changed since the last year, and Comcast continues to market its Xfinity brand more or less the same way. The company has not made substantially changes in its marketing spend since the current approach seems to be working out. Comcast has improved its pay-TV subscriber trend over the past two quarters by cutting down on losses. We estimate that the pay-TV business constitutes about 25% to Comcast’s value and that the company should be able to revert its pay-TV subscriber losses by next year.

See our complete analysis for Comcast

Marketing expenses are part of Comcast’s SG&A expenses, which is a critical driver of its value. However, given that the SG&A expenses for its cable networks segment amounted to around $7 billion, marketing expenses are a small portion of it. In essence, the news does not hold much significance as far as Comcast’s stock movement is concerned.

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Our price estimate for Comcast stands at about $32.50, implying a premium of about 5% to the market price.

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Notes:
  1. Comcast boosts ad spending; AT&T, Verizon slash marketing expenditures, FierceCable, June 18 2012 [↩] [↩]