Disney Gains On Comcast’s Sale Of A&E Networks Stake

by Trefis Team
+9.29%
Upside
54.72
Market
59.80
Trefis
CMCSA
Comcast
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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. [1] 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). [2] 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.

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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.

Our price estimate for Comcast stands at $32.50, roughly in-line with the market price.

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Notes:
  1. UPDATE 1-Comcast’s NBC to sell A&E Television stake for $3 bln, Reuters, July 10 2012 []
  2. Comcast’s 10Q filing for Q1 2012 []
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