Comcast Deal For NBCU Is All About Cable

Comcast senior management told Wall Street analysts today that their deal for NBC Universal is about taking a bigger share of the recession proof growth story that is cable content. Cable channels will account for 82% of the cash flow of the new NBC Universal entity, the executives said. Brian Roberts, CEO at the Philadelphia-based cable operator predicted that cable revenue would continue to grow significantly. Affiliate fees have been growing at 12% per year, advertising sales have been growing at 7% per year due to increasing ratings. Roberts pointed out that NBC Universal has five channels each with over $200 million in operating cash flow. In a slide, Comcast showed analysts just how well NBC Universals cable channels have been managed for margins. The compound annual growth rate of those cable channels is 16% over the past five years, while Comcast's cable channels have grown 10% over the same period. Comcast's Chief Operating Officer Steve Burke said: "In the last five years affiliate fees have grown 12%. I'm not sure they'll continue to go up, hopefully they'll go up single digits not double, but I think they're going to go up. But even if affiliate revenue goes up in the mid-single digits then it's still a solid leg of the stool."