Comcast Corp., the largest U.S. cable company, closed above $100 billion in market capitalization for the first time Tuesday, validating the gamble it made on NBC Universal almost two years ago.
Since buying a controlling stake in NBC on Jan. 29, 2011, Comcast has seen its stock increase by more than two-thirds. The company has benefited from improving prime-time ratings among 18- to 49-year-olds at the broadcast network, which climbed from last place to first this season.
Comcast, which has about 22 million cable-TV subscribers, now has a higher market valuation than McDonald’s Corp., Home Depot Inc. and Walt Disney Co. And it’s closing in on technology heavyweights such as Intel Corp., Cisco Systems Inc. and Qualcomm Inc. Comcast’s ascension is emblematic of both a successful acquisition and an industry that’s weathered difficult economic times, said Frank Louthan, an analyst at Raymond James & Associates Inc. in Atlanta.
“If you go back two years ago, everyone thought people would cut expenses, but as it turns out, Americans will pay their cable bills before they pay their mortgage,” Louthan said. “As incomes come down, cable and Internet both look like pretty good values.”
Comcast rose 1.4 percent to $38.05 at the close, a record high, amid a broader wave of cable-stock gains. Time Warner Cable Inc. climbed 0.4 percent to $96.27 for a 51 percent increase this year. Charter Communications Inc., up 30 percent this year, advanced 4.8 percent to $74.14.
Comcast is the best performing stock in the 16-member Standard & Poor’s media index this year. While the Philadelphia- based company shed cable-TV subscribers in 2012, the losses have shrank year over year for eight straight quarters. Comcast’s reliable revenue flow also appeals to investors in a shaky economy, said Louthan, who has the equivalent of a buy rating on Comcast and a $42 price target.
“As small-business growth stagnates, recurring revenue models will continue to add value, and that’s where investor dollars with flow,” he said.
Comcast spent $13.8 billion in cash and assets to buy its majority stake in NBC. Chief Financial Officer Michael Angelakis said in September Comcast is considering purchasing the remainder of NBC, owned by General Electric Co., in 2014. The network has relied on hit shows such as “Sunday Night Football,” “The Voice” and “Revolution” to boost ratings this year, following years of last-place showings.
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