By Corrie Driebusch and Lillian Rizzo
Activist investor Trian Fund Management LP, known for pushing
big companies to make operational and other changes, has taken a
stake in ComcastCorp. in a bet that the cable giant's stock is
Trian has accumulated about 20 million shares in
Philadelphia-based Comcast, for a roughly $900 million stake or
about 0.4% of the company, a person familiar with the matter said.
Comcast's market value is about $200 billion.
Executives at Trian, which was founded by Nelson Peltz, Ed
Garden and Peter May, recently began conversations with Comcast
management, the hedge fund said in a statement Monday, confirming
an earlier report by The Wall Street Journal. It isn't clear what
exactly Trian is focused on beyond a belief that Comcast shares are
Trian is known for encouraging changes at companies it targets,
such as a breakup or sale of underperforming divisions or moves to
improve efficiency and better use capital. It often seeks board
representation and tries to avoid public spats, unlike some of its
more pugnacious rivals.
Trian, which manages roughly $8.8 billion, is accustomed to
hunting large prey, having targeted companies including Procter
& Gamble Co., DuPont de Nemours Inc. and General Electric
But forcing change at Comcast -- assuming that is what Trian
tries to do -- could be difficult. The family of Brian Roberts, its
chairman and chief executive, holds a significant voting stake in
Comcast. Its stock has performed relatively well and hit an
all-time high before the onset of the coronavirus pandemic, which
briefly sent it down sharply. The shares have since recovered as
Comcast's broadband business has held up well in the pandemic.
Comcast's businesses include the Xfinity-branded broadband and
pay-TV unit, the NBCUniversal entertainment unit and Sky, a
U.K.-based satellite-TV operator and entertainment company.
Trian confirmed the stake in a securities filing, disclosing
ownership of roughly 7.2 million Comcast shares as of the end of
the second quarter. The stake has since grown to roughly 20
"We have recently begun what we believe are constructive
discussions with Comcast's management team and look forward to
continuing those discussions," Trian said.
A Comcast spokeswoman didn't have an immediate comment.
Comcast's stock jumped more than 2% on the news, though it ended
Monday down 1.3% at $44.68.
Comcast earlier faced criticism from investors and analysts who
believe it overpaid for Sky, which the company acquired for $38.8
billion roughly two years ago. The purchase price rose
significantly due to a bidding war with 21st Century Fox Inc.,
which ended with a blind auction in which neither party knew what
the other had offered. Comcast ended up offering GBP17.28 a share,
equivalent to $22.32, surpassing Fox's offer of GBP15.67.
Comcast's quest for Sky came after it lost a bidding war with
Walt Disney Co. for Fox's entertainment assets, which went for $71
billion. The Fox assets not sold to Disney are now known as Fox
Corp., which shares common ownership with Journal parent News
Sky's business was heavily hit by the coronavirus pandemic, with
revenue dropping by 16% in the second quarter as advertising
revenue plunged by 43%.
At the time of the Sky deal, Comcast executives said it would
lift the company's user base and boost its ability to invest in
technology, programming and valuable sports-media rights.
Comcast's main entertainment unit, NBCUniversal, was also hit by
the pandemic, with its revenue dropping 25% due to the halt of
theatrical releases, the temporary closure of its theme parks and a
sharp decline in advertising on its broadcast and TV networks.
Unlike NBC and Sky, Comcast's broadband business is growing at a
fast clip, and Mr. Roberts recently said he expects third-quarter
subscriber growth to set a record. At a conference last week, Mr.
Roberts said there will likely be more than 500,000 broadband
customer additions in the period.
"The cable business is an infrastructure asset with steady
growth and very high free cash flow," said MoffettNathanson analyst
Craig Moffett, referring to Comcast's broadband, pay-TV and phone
unit. "The other two businesses, Sky and NBC, are sort of cyclical
turnaround stories. They naturally appeal to entirely different
types of investors."
He added: "I can't imagine a shareholder that would disagree
that this company would be valued more highly if it were separated
NBCUniversal Chief Executive Jeff Shell has been pursuing a
major reorganization centered around the growth of the company's
new subscription streaming-video service, Peacock.
That has entailed layoffs and other cost-cutting measures. The
company is creating a centralized unit to decide which programming
to create and which networks or digital platforms should distribute
it, a major shift from the entertainment industry's traditional
approach of empowering the management at individual TV
Peacock was the latest effort by a media and technology giant to
catch up with Netflix Inc., the subscription-streaming service that
has a long lead on many of its competitors. Disney, Apple Inc.,
AT&T Inc. and Comcast have all launched streaming services over
the past year.
Write to Corrie Driebusch at email@example.com and
Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
September 21, 2020 18:53 ET (22:53 GMT)
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