Comcast: Cord-Cutting Is Just A Nuisance, But Something Far Bigger May Be Coming

11/1/17

In summer 2016, I wrote an article in which I postulated that Comcast (CMCSA) was at the peak of its value and would see a substantial share price decline going forward. Not exactly my finest moment. Despite its recent difficulties, Comcast is still trading at $36.50 a share. That is actually $5 above the (split-adjusted) price it was at when I wrote my bearish article.

In for a penny, in for a pound. I remain skeptical about set-top box revenue growth, the reason for my original bearish thesis. But the changes at the FCC reduce the proximity of that threat at least a little. However, I am also growing increasingly skeptical about Comcast for another reason.

The Other Duopoly May Be Crumbling

A big reason Comcast has managed to ride out the rise in cord-cutting so well thus far is high-speed broadband, which is often bundled in with Comcast TV service. Because satellite providers DIRECTV and DISH Network (DISH) cannot offer high speed broadband, Comcast usually has either a monopoly on such services, or a duopoly with the local phone provider, which in some cases is DIRECTV’s owner, AT&T (T).

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