Comcast has announced that upcoming spin off of its theme park and media assets separate from its broadband and wireless operations. This will place Universal’s theme park division inside a standalone media and entertainment company called NBC Universal with the communications business will remain known as Comcast. The new NBC Universal will be structured similar to Disney and this movie is being done with the hope that the market will value the new company like it does Disney. When you compare the two companies they are similar in market cap and annual revenue, but the stock price is a different matter as Disney stock trades at near double that of Comcast. Why is Disney stock worth more than Comcast stock?

The Walt Disney Company (DIS)

• Market Capitalization: ~$167.5 billion
• Annual Revenue: $94.4 billion (FY 2025)

Comcast Corporation (CMCSA)

• Market Capitalization: ~$129 billion
• Annual Revenue: ~$123.5 billion (Trailing 12-Months)

In the stock market even if two companies have the same amount of sales or profit, they may be valued completely differently. This is referred to as Price-to-Earnings ratio or P/E ratio which measures a company’s current share price relative to its earnings per share. The market will give certain stocks a premium multiple if it is felt that its earnings are likely to either be consistent or grow in the future and give lesser multiples to companies expected to see revenue declines. Disney commands a higher Price-to-Earnings ratio (~15x) compared to Comcast (~5x) due to its perceived premium brand, integrated intellectual property (IP), better IP monetization and being more of a pure-play focus on content/experiences. Comcast meanwhile has headwinds associated with cord cutting in its broadband and cable business as well as increased competition in the wireless space. However, with the new NBC Universal shedding the “less desirable” wireless, broadband and cable aspects of its business, the new company will likely see its multiple increase.

Disney commands a higher Price-to-Earnings ratio (~15x) compared to Comcast (~5x) due to its perceived premium brand, integrated intellectual property (IP), better IP monetization and being more of a pure-play focus on content/experiences.

The new NBC Universal will contain the Universal theme parks along with the Universal film/TV studios, NBC, Telemundo, Peacock, Bravo. Sky and Comcast’s European media business. Disney is made up of its Disney theme parks, cruise line, film/TV studios (Pixar, Marvel, Lucasfilm, 20th Century, ABC,) Hulu, Disney+, ESPN, Disney Channel, Freeform, FX and 50% of A+E. If you look at the construction of the two companies, they’re remarkably similar. You’d probably have to call Disney the leader in each of the key market segments, but Universal is growing quickly. Along with Epic Universe there’s the new Universal Kids Resort in Frisco, Texas and the upcoming Universal park in the UK. Universal may also have the better IP to appeal to the next generation with Nintendo, Pokemon and Harry Potter. The new Epic Universe may also elevate Universal parks into the “premium” category to more consumers and Wall Street investors. Please note that this is opinion only and no investment advice is provided here, the content is for informational purposes only and does not constitute professional guidance.

This split is proposed to happen at this time next year and Comcast shareholders at that time will own stock in both Comcast and the new NBC Universal. It is possible to invest in the theme park aspect of Comcast today through the current stock, but the new NBC Universal stock will be a much more targeted opportunity to do so. It will be interesting to see how the two new stocks perform after the split. The cable TV, wireless and internet service portion of the current business generate a lot of cash, but it has been shrinking over time. Peacock (Comcast’s streaming service) is projected to turn a profit for the first time this quarter, meaning the theme parks will be the dominant component and doing a lot of the heavy lifting for the new NBC Universal stock. Theme parks have also been the dominant part of the profits for Disney stock, so it really is Universal parks versus Disney parks. Perhaps these are the early days of the battle of the media titans, the Mouse versus the Minion? We’ll be able to watch it play out as well as vote with our pocketbooks and see who wins the hearts and minds of both consumers and investors.