Comcast Invests In YouTube Tools Startup

CMCSA: Comcast logo

Comcast (NASDAQ:CMCSA) has been known for its presence across all the verticals in multimedia content. In a latest move, the mammoth company acquired a stake in Fullscreen Inc., a start-up that helps video makers manage their presence on the world’s largest video site along with marketing, programming and selling ads for more than 10,000 channels of younger musicians, comedians and other video-content creators on YouTube. [1] While the number of cord cutters is growing in the saturated pay-TV industry, Comcast wants to ensure it has a strong hold on alternative platforms.

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What is Fullscreen?

Founded in 2011, Fullscreen Inc., runs end-to-end channel management and optimization service offering a full suite of software tools, strategic consultation and hands-on services designed to build audience and engagement around video content. It also works with some of the popular brands on YouTube such as NBC, Pepsi (NYSE:PEP), Ford (NYSE:F), Nintendo and Google (NASDAQ:GOOG). The company powers over 5,000 channels and 30 networks delivering over 2.5 billion views each month across every content vertical. [2]

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Comcast’s Stake

Fullscreen raised $30 million from Comcast along with The Chernin group. [3] Comcast itself is the largest cable company in the U.S. with more than 21 million pay-TV and 19 million broadband subscribers. [4]

The cable TV market is saturated in the U.S., and it is further shrinking with cord cutters moving to online service providers such as Netflix (NASDAQ:NFLX) and Hulu. Comcast has been aggressive to attend to the customer churn and has been moving forward in the evolving space of online content. Comcast already owns 32% of Hulu, but it is directed by FCC not to exercise any right to influence the conduct or operation of Hulu. [5] Comcast offers entertainment content online through its Xfinity Streampix services, which enables a subscriber to view entire past seasons of various popular shows and movies.

Earlier, Time Warner made an investment in Maker Studios and Bertelsmann in fashion network StyleHaul. Both of these investments are in similar domains where revenues are generated by representing a pool of video makers on YouTube. [2] Fullscreen has raised this money to invest into original content that it would own and operate, while also investing in the company’s tech and software to facilitate international expansion. While the details of the deal are not disclosed at this stage, Fullscreen appears to be a good investment by Comcast due to its vast presence on rapidly evolving video industry.

Our price estimate for Comcast stands at $46, implying a premium of over 10% to the market price.

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  1. Fullscreen Closes Series A Funding Round Led by The Chernin Group, Comcast Ventures and WPP, Fullscreen Blog, Jun 17, 2013 []
  2. Fullscreen’s webpage [] []
  3. Chernin, Comcast Investing in YouTube Tools Startup Fullscreen, AllthingsD, Apr 4, 2013 []
  4. Comcast’s SEC Filings []
  5. Comcast will retain NBC’s stake in Hulu, but is stripped of control, LA Times, Jan 18, 2011 []