The latest information on the Regional Telco Magazine, published by WordSouth — A Content Marketing Company. This collaborative publishing effort provides rural and independent telecommunications providers and opportunity to communicate local, national and industry news to their subscribers, empowering them to educate, inform and engage their key stakeholders.
Will the Second Wave of Online Video Distribution Services Drown Out U.S. Pay...Cognizant
With the advent of numerous online video delivery (OVD) services by content providers, the pay TV industry is primed for a challenging time. We offer a detailed list of what to start doing, keep doing and stop doing for such pay TV providers.
The latest information on the Regional Telco Magazine, published by WordSouth — A Content Marketing Company. This collaborative publishing effort provides rural and independent telecommunications providers and opportunity to communicate local, national and industry news to their subscribers, empowering them to educate, inform and engage their key stakeholders.
Will the Second Wave of Online Video Distribution Services Drown Out U.S. Pay...Cognizant
With the advent of numerous online video delivery (OVD) services by content providers, the pay TV industry is primed for a challenging time. We offer a detailed list of what to start doing, keep doing and stop doing for such pay TV providers.
A report from the Writer's Guild of America on how media mergers has not benefitted writers or consumers and criticizes the government for failing to enforce anti-trust rules.
Electronic media management & the accounting costYAHWEH CLOTHINGS
ELECTRONIC MEDIA MANAGEMENT, MANAGEMENT,EVOLUTION OF MANAGEMENT, FINANCIAL MANAGEMENT, THE ACCOUNTING COST,BROADCASTING SOFTWARE COMPANIES,TRAFFIC SCHEDULING, MULTIPLE RADIO STATION BUDGET,PROGRAM UPLOADING SOFTWARE, AUTO VAULT BROADCASTING COMPANY, DIGI LINK BY ARRAKIS, PROPOSAL FOR MULTI STATION CENTRALIZEDTRAFFIC AND ACCOUNTING SYSTEM IS DESCRIBED AND REFERRED FROM" Electronic media management' BOOK BY PETER K PRINGLE AND MICHAEL.F.STARR.
Integrated Marketing Communications project, creating a new marketing plan for Verizon FiOS. Credit to Nicole Spiros, Frank Pirog, Xiao Xiao Yu, and Young Lee
Provides a clear picture of the current internet and cable industry in the US and where Comcast stands. Also speaks about the financial aspects of Comcast and where it needs to improve.
A report from the Writer's Guild of America on how media mergers has not benefitted writers or consumers and criticizes the government for failing to enforce anti-trust rules.
Electronic media management & the accounting costYAHWEH CLOTHINGS
ELECTRONIC MEDIA MANAGEMENT, MANAGEMENT,EVOLUTION OF MANAGEMENT, FINANCIAL MANAGEMENT, THE ACCOUNTING COST,BROADCASTING SOFTWARE COMPANIES,TRAFFIC SCHEDULING, MULTIPLE RADIO STATION BUDGET,PROGRAM UPLOADING SOFTWARE, AUTO VAULT BROADCASTING COMPANY, DIGI LINK BY ARRAKIS, PROPOSAL FOR MULTI STATION CENTRALIZEDTRAFFIC AND ACCOUNTING SYSTEM IS DESCRIBED AND REFERRED FROM" Electronic media management' BOOK BY PETER K PRINGLE AND MICHAEL.F.STARR.
Integrated Marketing Communications project, creating a new marketing plan for Verizon FiOS. Credit to Nicole Spiros, Frank Pirog, Xiao Xiao Yu, and Young Lee
Provides a clear picture of the current internet and cable industry in the US and where Comcast stands. Also speaks about the financial aspects of Comcast and where it needs to improve.
This document brings together a set
of latest data points and publicly
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Both with significant changes of interest to technology business
> Higher cash refunds as Provinces match increase in federal SR&ED expenditure limits
> Multi-Media and e-business get increased tax credits
> Ontario Tax Holiday for companies that commercialize University R&D
OTT Video Trends and Opportunity (2018)MC[CO] Labs
This upload features a summary of MC[CO] Labs' work in video streaming and our general perspective on OTT video trends from our more recent work, sanitized to protect the confidentiality of our clients.
3. Proposal
For the proposal of the group, I would like to focus on the financial structure aspect of the
company, and propose changes to the financial structure in comparison to similar companies in
the same industry. Along with using companies in the same industry to base my proposal on, I
will also be using companies with the same cost of equity, cost of debt, and tax rates. For my
proposal I’d like to focus on the cable industry, and in particular two companies Time Warner
Cable (TWC) as well as Comcast (CMCSA). The average cost of capital for the cable industry
comes in at 7.16%, with average (E/V) ratio of 66.84% (Stern).
As for my proposal, I believe Comcast with a WACC of 9.31% compared to a competitor such
as TWC with a WACC of 8.9% and more debt, can substantially lower their cost of capital with a
more refined capital structure. A structure slightly more bias in debt compared to their old one,
and take advantage of the lower debt rates, tax shield, and by not increasing their Re in large
enough margins to effect the new WACC. By finding an optimal capital structure, to reduce
WACC while maintaining financial risk without increasing equity costs.
Time Warner Cable
Comcast
4. Overview
Comcast is a global media and technology company in business since 1963. Comcast is the
overall number one pay-tv provider in the US with an estimate of 27.7 million video subscribers
for their cable division. The largest revenue generator is their cable division and provides
services to 39 states and the district of Columbia. Its broadband Internet service has an
estimate of 23 million subscribers and its XFINITY computer telephony service has an estimate
of 11.5 million customers. In 2011 Comcast acquired NBC Universal from general electric
company, which includes The Cable Networks, Broadcast Television, Filmed Entertainment and
Theme Parks. Cable communications is provided under the brand Xfinity they provide tv,
internet and home phone services.
A general SWOT analysis shows that Comcast’s strength is being the number one competitor in
the industry and they have a fast growing, high margin broadband Internet business. An
opportunity is Innovation with their new X1 set top box that would completely change a viewers
tv experience. X1 would include features such as video streaming, socials apps and work on
voice command. A weakness is that they have a reputation for poor customer service , in
previous years they have received an award for worst company in America. Also there a lot
disputes with programmers and other possible partners. A current threat being faced is that
people no longer want to have contracts with their cable subscriptions. They do not like
commitment and it would like less expensive service. Another threat is that government
regulations and laws can get in the way of acquisitions and the way Comcast operates. For
example, in 2014 Comcast was working on a deal to acquire time warner which is one of their
main competitors, the deal did was not made because the government did not allow it because
they considered that Comcast would have too much power and control over the price of service.
Competition
With the expansive outreach of its business, it is important for Comcast to maintain a
competitive edge against its competitors. Comcast Corporation has two primary businesses,
Comcast Cable and NBC Universal. These businesses consist of a wide array of services and
content that has Comcast set foot in several industries and opens its doors to bigger
competition. Comcast Cable under the Xfinity brand, is one of the largest in the Cable TV
industry, with competitors such as Verizon Fios and Time Warner Cable. However, Comcast’s
debt-to-equity ratio has been relatively low at around 1, nearly half that of the industry average
(2.25 as of March 2016). Taking a look at a competitor such as Time Warner Cable shows a
greater debt-to-equity ratio which means lower costs while providing similar services. Comcast’s
presence in the Tech and Telecommunications industry will also have them compete against big
firms such as Google and Skype, which continues to expand their reach over industries as well.
In addition, the Cable TV industry as a whole is under a new threat with the rise of streaming
providers such as Netflix and Hulu. Such services allow people to watch their favorite movies
and TV shows anytime, giving customers more favorable control over content. As a result, there
has already been a decline in households that watch cable television. Keeping these challenges
5. in mind, we feel that leveraging the corporation with debt and taking advantage of tax shields
will allow them to lower costs and take on more projects. With a history of relatively low debt-to-
equity ratio, Comcast has a lot of room to increase their debt and lower their costs without
facing much financial risk.
Proposal
The initial idea comes from our advantage of debt to equity Ratio. As we mention, Comcast
currently has debt-to-ratio of 1.06; while the industry has average debt-to-ratio of 2.25. Since we
want to take advantage of it, we propose the company to issue 15 billion debt as conservative
option and 25 billion as aggressive option with 10-year bond. Through the debt, the company
will be able to have lower WACC, more tax deduction saved from more debt, and will have more
capital to invest our company in order to gain more profit.
Our goal from the proposal is reducing WACC (weighted average cost of capital) and increasing
the interest shield saved. According to the WACC formula (RA= (E/V)RE + (D/V)RD(1-TC), We
need to get accountable data to use for the formula. We use the equity, debt, and value of the
company from the company’s income statement and balance sheet. We have chosen to use the
3-year-average cost of debt (interest expense/total debt) and the tax rate (Income tax
expense/income before tax). For the cost of equity, we have used CAPM model. Especially, we
have decided to use 10-year treasury risk free rate since we are going to take 10-year bond.
Current Conservative Aggressive
+ 15B Debt + 25B Debt
WACC 9.04% 8.66% 8.44%
Interest Shield $19,289.35m $24,489.85 $27,956.85
D/E 1.06 1.34 1.53
According to the result, we can project that WACC will be decreasing and interest shield will be
increasing. Also, we will still have a lower D/E ratio than the industry (2.25) after all having
additional debt.
Capital Uses
With the acquisition of new debt, there comes disadvantages and advantages with issuing new
debt. Advantages include a reduction in tax expense from interest payments, benefits from high
returns from investments funded by the newly acquired capital, and the lack of votings
rights/ownership from debt holders. The disadvantages include the increase of financial risk
from issuing new debt, by increasing the leverage of your company. With higher leverage
investors will usually require higher returns. But we believe Comcast will not have to worry much
at these disadvantages, especially in the rise of financial risk. Comcast is well below the
industry average in leverage ratios, and have a generous amount of room to raise capital with
debt, and not alarm investors with a negative signal.
6. Further indications that a company can raise capital through the issuance of debt, is a sight of
constant EBIT. By having a constant EBIT investors will be reassured that the company will be
able to uphold their periodic interest payments. Comcast not only shows a constant EBIT, but
from the past 5 years Comcast have a generated a constant growth in EBIT, and in the last 5
years have grown 71%. This can signal to investors that Comcast can take on new debt while
not taking on much risk, and at the same time make good investment decisions that have
generated increased returns.
Our sole purpose of increasing debt, is to not decrease WACC, but to raise capital through debt
in order to make new acquisitions and investments. With the increase threat that Comcast faces
from online streaming services such as Netflix, and Amazon. It is important for Comcast to
invest capital in either acquiring already established streaming services like with what they did
with their partnership in Hulu with Disney, and Fox. They can also inject investments into
improving their already available small platform of steaming services, by providing more content
with reduced costs. Comcast can also provide more capital to their venture funds, and invest
and seek out huge returns from startup companies that focus on new technologies and
businesses.
Another use of the newly acquired capital can be used to buy back ownership in term of equity
and shares outstanding, and slowly raise the needed capital through debt instead. With our
current/future investments, and company emphasis on growth, we believe the company stock
value is undervalued. Our team believes the intrinsic value is marginally higher than the current
market price of our stock (62.64 closing price on Tuesday 5/10/16). A share buyback can also
signal positive remarks to investors, in the company's management in its investment and future
growth.
Conclusion
Comcast is currently a uncontested company in the cable industry, leading in all aspects of the
industry. It is miles ahead of all their rivals, and our team believes it can take the advantage of
their position in the industry, and further establish and grow their entity. By using new capital in
debt, Comcast can decrease their total cost of capital, continue to make profitable investments,
and secure itself from threats such as online streaming providers. All the while, Comcast does
not have to problem the fear of financial risk, as they have a great leverage ratio compared to
their investors. We believe the acquisition of this newly issued capital, will maintain and drive
Comcast’s position in the world market.
