Thursday, December 22, 2011

Comcast And Live Nation Big Winners From Super Bowl Streaming Deal (You're getting very tired with news like this)

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Comcast And Live Nation Big Winners From Super Bowl Streaming Deal

On December 20th, Comcast (CMCSA) announced that the Super Bowl will be available to stream for free for the first time in 2012. The move is not a huge surprise as this year viewers can stream all of NBC’s Sunday Night Games for free at On February 5th two teams will compete on Comcast’s NBC channel and also on and The deal announced that the game will also be available as a mobile stream to Verizon customers. The stream will only be available to Verizon customers who subscribe to the NFL Mobile application and pay the $10 monthly subscription fee.

The Super Bowl era began in 1967 with the Green Bay Packers beating the Kansas City Chiefs. In February two teams will meet in Super Bowl XLVI (46) as two teams compete in front of a large television audience and now potential large web audience for the Lombardi Trophy, given to the winning team. Comcast closed its acquisition of NBC from General Electric (GE) and with it gained the rights to the 2012 Super Bowl. The game will most likely be the most viewed television event in North America for the entire 2012 year. Last year’s matchup between the Green Bay Packers and Pittsburgh Steelers became the most watched television event in North America with 111 million viewers.

I am using the numbers from this year’s Sunday Night Football games to estimate what the Super Bowl could generate for Comcast’s website. The games usually generate 21 million viewers and pull in an extra 200,000 to 300,000 online viewers. Using conservative estimates of 100 million Super Bowl television viewers this year, this would represent 952,380 to 1.4 million viewers on the internet. The big difference of course compared with Sunday night games is Super Bowl viewing parties. I think the number will be more around 800,000 for online viewers. The mobile numbers are harder to estimate without knowing how many people subscribe to the NFL application on Verizon.

The commercials for Super Bowl XLVI are almost all sold out at a rate of $3.5 million per 30-second advertisement. Commercials are a large part of what makes the Super Bowl so successful and helps capture audiences of casual sports fans. The internet stream will feature different commercials and it is unknown how much these ads will go on sale for but it will be extra income for Comcast from its first Super Bowl.

It is also unknown if Madonna’s halftime show will be streamed online or on mobile phones. I am assuming it will be which would be beneficial to Live Nation (LYV). IN 2007, Live Nation signed a $120 million deal with Madonna to be the exclusive promoter of her music and concerts for a share of revenue from concerts and licensing in return. Super Bowl performers usually see a large surge in album sales and interest. The stream of her performance to close to a million computers and domestic and international audiences could do wonders for her album sales and in turn help Live Nation see some profit from its large initial investment.

The two biggest winners from this deal appear to be Comcast and Live Nation.

Live Nation shares are currently trading at $8.30, which is about 25% off of the 52-week high of $12.44 reached back in July 2011. The Ticketmaster merger has not been as beneficial for Live Nation shares as I once thought it would be. I think Live Nation is a great trade at this level. Madonna is releasing her fist CD under the Live Nation deal in March of 2012. Shares are trading for less than half of what they were when the Madonna deal was signed. If her halftime show is streamed shares could see immediate benefits and rise to the $12 level by mid 2012.

I wrote early this year about the companies most impacted by the NFL lockout. Comcast was one of the stocks I mentioned and actually listed as the one that could take the biggest loss if there was no season at all. Of course since that time the NFL has played its entire regular season and is on pace to have an exciting Super Bowl matchup as well this year. With the Super Bowl and the transformation of NBC Sports, Comcast is beginning to bet big on sports and offer fierce competition for market leader ESPN, owned by Disney (DIS). Shares are undervalued currently trading for around 12 times next year’s predicted $1.86 earnings per share. Shares trade at $23.59 as I write this article and should trade closer to $31.62 or 17 times next year’s earnings estimates. I think the Super Bowl will pay off huge for Comcast. Do yourself a favor and buy Comcast shares before the Super Bowl to take advantage of this discounted share price.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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