Comcast (NASDAQ:CMCSA), which acquired NBCUniversal from GE (NYSE:GE) last year, has decided to sell its 15.8% stake in A&E Networks for $3.02 billion.  NBCUniversal had held this stake for a while, and according to Comcast’s latest balance sheet, this stake was valued at a little over $2 billion ($2.019 billion to be exact).  This implies that Comcast can effectively increase its value by roughly $1 billion, implying less than 2% upside to our current estimate. Although the deal may look like a big one, it doesn’t move the needle for Comcast’s stock.
A deal value of $3.02 billion and Comcast’s share of 15.8% implies that A&E Networks is currently valued at approximately $19 billion. Given that Disney (NYSE:DIS) has a stake of 42.1% in A&E Networks, the improved valuation of A&E Networks bodes well for it as well. In fact, this implies that Disney’s stake is worth $8 billion while the company recently recorded just about $2.7 billion worth of equity investments on its balance sheet. If we recognize the investment at the value indicated by the Comcast deal, there could be more than 5% upside to our price estimate for Disney.
- Comcast Q4 Earnings: Best Pay-TV Subscriber Performance In Last Nine Years, NBCUniversal And High-Speed Internet Continue To Grow
- Comcast’s High-Speed Internet Business: Subscriber Base, ARPU Growth Likely
- Comcast Q3 Earnings: NBCUniversal, High Speed Internet Drive Growth
- Comcast Q3 Earnings Preview: NBCUniversal, Subscriber Trends In Focus
- Comcast’s Pay-TV Business: Our Long-Term Projections Suggest Growth In ARPU Will Offset Declining Subscriber Base
- Comcast Q2 Earnings: High Speed Internet Segment And NBCUniversal Lead Revenue Growth
Our price estimate for Comcast stands at $32.50, roughly in-line with the market price.Notes:
- UPDATE 1-Comcast’s NBC to sell A&E Television stake for $3 bln, Reuters, July 10 2012 [↩]
- Comcast’s 10Q filing for Q1 2012 [↩]