(CMCSA) Comcast Fully Takes Over MSNBC

NBC News, part of Comcast Corporation (CMCSA)-owned NBC Universal, bought the remaining 50% stake in news website company MSNBC Digital Network from Microsoft Corporation (MSFT) for $300 million.

Both MSNBC channel and MSNBC Digital Network (popularly known as MSNBC.com) was incepted in 1996, as a joint venture between Microsoft Corporation and NBC Universal. The recent deal marks the end of the 16-year old relationship between the two companies and consequently MSNBC.com will be known as NBCNews.com.

Back in 2005, NBC Universal gained full control of MSNBC news channel, but the popularity of the MSNBC brand had induced NBC Universal to keep its name unchanged.

The acquisition of the remaining stake in MSNBC.com will not only help NBC gain complete control over the digital business but will also simplify things regarding management of both channel and digital business, which in turn will boost the company’s advertising revenue going forward.

According to a research firm comScore, Inc (SCOR), the MSNBC.com website was visited by 164 million users in May this year, just behind Google Inc. (GOOG) and Yahoo! Inc. (YHOO). We believe that such massive popularity of its website business may attract more companies for advertising, thus resulting in growth in that business.

At present, Comcast has nearly $2 billion of cash in hand. Recently, the company announced its plans to sell 15.8% stake in A&E Television Networks for $3.03 billion, which will further improve its liquidity position. Therefore, we believe that payment of $300 million to Microsoft will not be an issue for the company.

Moreover, it is also believed that the payment to Microsoft will be made through the existing profit of MSNBC.com business, hence giving the company more option to arrange for funds for the payment.

Currently, we are maintaining our long-term Neutral recommendation on Comcast. Comcast has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

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