
Netflix is now worth more than Comcast - denzil_correa
https://www.recode.net/2018/5/23/17386696/netflix-reed-hastings-comcast-worth-more
======
thisisit
Comcast has 15 billion in net income last quarter whereas Netflix had 185
million. And PE ratio of comccast is 19 whereas Netflix is 188. In the future
where the cord cutting trend continues and Netflix gains tons of subscribers
the valuation might make sense. But for now, I feel this looks like very
overvalued.

~~~
scarface74
The whole idea of "cord cutting" hurting cable is insane. If you don't
subscribe to cable and you subscribe to internet based streaming services,
you're still getting content delivered to your home via either a cable "cord"
or the phone company. Netflix at most gets $12/month per subscriber. Comcast
will get $80 - $110/month for internet service. Comcaast also has either no
competitors in their market or at most one.

Comcast owns NBC and bunch of cable companies and has an ownership stake in
Hulu. Comcast gets your money either way.

Netflix has to spend money on content and only has one way to recoup the cost
-- subscriptions. Comcast also produces content via its TV and movie studios
but makes money off of content via broadcast networks, cable companies, video
on demand, and licensing to streaming companies and pay tv.

~~~
rayiner
> The whole idea of "cord cutting" hurting cable is insane. If you don't
> subscribe to cable and you subscribe to internet based streaming services,
> you're still getting content delivered to your home via either a cable
> "cord" or the phone company.

Right now, people pay $150+ for a package with all the TV channels, while you
can get the broadband for $50 or so. Cable companies could dramatically raise
prices on the basic broadband service to compensate. But that’s not going to
fly in this next generation with 5G and satellite competition.

The average Netflix user watches 600 hours per year, or 50 per month. HEVC is
1.5 gigs per hour for 4K, so that’s under 100 GB per month. If data caps for
5G increase at about the same pace as for 4G, wireless data caps will be
within that range within five years. Heck, AT&T’s fixed wireless is already at
160 GB per month. And Verizon has publicly stated its 5G service wonkt have
the kind of data caps its 4G service has:
[https://www.pcmag.com/news/357374/verizon-no-4g-level-
data-c...](https://www.pcmag.com/news/357374/verizon-no-4g-level-data-caps-
for-5g-home-service).

The idea that cable providers can raise prices to compensate for lost TV
revenue is predicated on the assumption that there are no alternatives. That
assumption ignores just how much bandwidth 5G gives you to play with.

~~~
karpodiem
Comcast has hiked standalone broadband to $75 -
[http://stopthecap.com/2017/12/21/75-month-broadband-
pricing-...](http://stopthecap.com/2017/12/21/75-month-broadband-pricing-
arrives-comcast-country-company-raising-rates/)

Interestingly, you can get a cheaper promotional rate if you bundle local TV
channels (cheaper than $75/month for both internet + tv) so Comcast can
inflate its video subscriber (to boost their stock price) amount and they hope
you forget you're on a promotional rate your bill jumps $30-40 after you drop
off promo. You're free to negotiate (most people do) to get back on the promo
rate; many people have success with this, but it's just a cat/mouse game and a
hassle.

And Comcast also has a 1TB monthly usage cap. When the era of 2160p + HDR
arrives in the next few years, people will chew through that cap rather
quickly.

Comcast will continue to jack up standalone broadband prices to hedge against
fleeing video subscribers. Why? Because they can, and have very little
competition in most markets.

~~~
rayiner
> Comcast will continue to jack up standalone broadband prices to hedge
> against fleeing video subscribers. Why? Because they can, and have very
> little competition in most markets.

That's coming from the perspective of an HN reader, for whom wireless isn't
"competition." (I get it, I've got two fiber lines to my house; 3 gigabits
total. My daughter uses it to stream Magic Schoolbus.) But for the typical
user, 5G wireless services (say 50-100 mbps with 100GB data cap) is going to
be enough. We're already at 15% of households making $100k+ ditching wired
Internet for 4G. That number is growing, and will explode when 5G service
rolls out.

~~~
toomuchtodo
I'd argue that with more than two people in a household and everyone switching
to streaming services, you'll need to offer at least 400-500GB data caps for
fixed wireless 5G.

Several of my renters are single, and their streaming usage for an individual
is ~450GB/month.

~~~
rayiner
You need 400-500GB to accommodate _who_? According to Comcast, median Xfinity
data usage in 2H 2017 was 131 GB:
[https://www.xfinity.com/support/articles/data-usage-
average-...](https://www.xfinity.com/support/articles/data-usage-average-
network-usage). That's going to be squarely within the range of 5G (analysts
are guessing around 200GB caps at first). Also, expect to see video content be
zero-rated (it makes technical sense--watching Netflix from one of Netflix's
co-located CDNs puts a lot less load on the network).

Remember, 5G doesn't need to be an alternative for _everybody_ to wreck the
ability to raise prices to compensate for lost TV revenue.

~~~
mmt
> According to Comcast, median Xfinity data usage in 2H 2017 was 131 GB

Given their recent push for data caps (and make money off of overages), I'm
sceptical of their numbers. They have a pretty obvious incentive to
misrepresent (if not understate outright) the value to make their caps appear
generous.

Also, is median (same as 50th percentile, right?) really the right statistic
to consider? I'm not sure any one number is sufficiently meaningful, as the
shape of the graph can be particularly informative.

More importantly, how has that changed over time, as compared with the
penetration of 4K TVs versus 1080p ones (or the availability of 4K content or
some similar metric)?

Conversely, I think mobile data is also more likely to be significant as
competition in multi-person households, even with the caps you mention,
because those have a chance of being per person/handset (absent family/share
plans), while Comcast is likely to be one cap per household no matter how many
people/screens stream at one time.

~~~
arbie
Agreed, I think the histogram would be bimodal, split between people that
solely watch cable TV and cord-cutters that solely stream.

------
wufufufu
What's more shocking to me is that Netflix is worth more than Disney.

Just look at the list of Disney subsidiaries[1], then look at how bad the
average Netflix original movie is and then tell me if the market caps makes
any sense at all.

[1][https://en.wikipedia.org/wiki/List_of_assets_owned_by_Disney](https://en.wikipedia.org/wiki/List_of_assets_owned_by_Disney)

~~~
stcredzero
_What 's more shocking to me is that Netflix is worth more than Disney._

What is the chance that Disney can execute implementing its own Netflix? What
is Disney's batting average on projects like that?

~~~
niftich
_" The Walt Disney Company to Acquire Majority Ownership of BAMTech"_ [1].

 _" The company's major clients include the NHL, HBO (for its HBO Now
service), the PGA Tour, Riot Games, WatchESPN, PlayStation Vue, WWE Network
and TheBlaze."_ [2]

 _" Marvel, Star Wars films to ditch Netflix for Disney service"_ [3]

I'd say they have both the content, technical expertise, and tenacity and
perseverance to pull it off.

[1] [https://www.thewaltdisneycompany.com/walt-disney-company-
acq...](https://www.thewaltdisneycompany.com/walt-disney-company-acquire-
majority-ownership-bamtech/) [2]
[https://en.wikipedia.org/wiki/BAMTech](https://en.wikipedia.org/wiki/BAMTech)
[3] [https://www.cnet.com/news/marvel-and-star-wars-films-will-
di...](https://www.cnet.com/news/marvel-and-star-wars-films-will-ditch-
netflix-for-disney/)

------
phoe-krk
This zeitgeist is exactly what cable companies still try to fight against. We
no longer need content to be served whenever someone streams it; we need
content available whenever we want to access it.

For this, we no longer need cable companies; we need internet service
providers.

~~~
lkbm
Funny. I think of Comcast as an ISP. I know they provide cable TV, and do
everything they can to upsell/bundle it with their Internet access, but to me
they're just an ISP.

I just checked, and it seems revenue-wise they're still more TV than Internet,
but the trend is towards Internet revenue, and in subscriber-count, it flipped
in 2015. I'm guessing, though, that the ISP revenue won't grow a ton, whereas
the TV revenue will continue to drop.

~~~
scarface74
They are more "TV" because they own NBC. They also make money by licensing
content to among other companies - Netflix.

------
butterfi
Traditional TV cut its own throat by expanding commercial air time to the
point where customers are actively looking for and consuming alternatives.
Rather then address the issue of why traditional TV is being rejected, Comcast
is trying to coerce its members into subsidizing TV by making their
subscription bundles more competitive then simply getting an internet
connection. That won't do much in the long run as people like me start
refusing to pay for those extra services (TV, phone). I've already dropped
Comcast for Sonic for some for these reasons.

If I was in charge of a TV network, I'd start dropping the amount of ad time
during programming and start adding more time to my hit shows. I know there is
an ecosystem that makes this challenging, but would you rather spend you life
bailing out the water or would you rather just fix the boat?

~~~
sykh
What Comcast doesn't mention is that when you get a TV bundle to save on
internet costs the fees they tack on for TV increase the monthly bill by
around 40% of the advertised rate. Bundling TV is actually more expensive when
you look at the total bill but people buy according to the advertised rate vs.
the actual bill.

~~~
rconti
There's no way that's true unless you live in a really messed up market,
taxation-wise.

Here in the SF bay area I have gigabit internet through comcast and allow them
to shove their "basic" cable TV service in my general direction (it's not even
hooked up) because it 'saves' me $5 or $10 or whatever per month on my
internet charges. (All I know is the total bill is $144 which is less than the
advertised rate of $169 for Gigabit, but I've been through this excercise many
times in the past 5 years, where I try to get JUST internet, and they offer me
tv+internet for $5 or $10/mo cheaper; last time I didn't even ask for the full
numbers)

Fees:

Broadcast TV Fee $8

FCC Regulatory Fee: $0.08

Franchise Fee: $2.01

PEG Access Support: $0.55

Local Utility User Tax: $1.55

State Sales Tax: $0.23

So, $12.42 in taxes and fees, only $8 of which is clearly related to broadcast
TV (and here I'm assuming I don't pay that fee just by being a subscriber to a
cable company, even if I get internet-only).

I plan on calling sometime soon to clarify, but I've done it many times, and
it never saves me a penny.

~~~
scarface74
There is also the $10 "HD Technology Fee". If you have multiple TVs it's $10
for each additional set top box per month. I know our 6 TVs is a little
extreme but that by itself would be an extra $50 a month.

~~~
rconti
Ah. I have no idea what kind of box they gave us, it just sits in the attic.
I've got 3 TVs; 1x 4k and 2x 1080p but they're all hanging off the TiVo Bolt
and TiVo Minis.

We're definitely not getting charged an extra tenner for an HD box.

------
stcredzero
In 2018, why the heck is it that I can't click on something to indicate, "I
want to watch this," then I get a notification when it airs, and have a list
of shows/events now available to watch? If media companies want their
advertisements to be worthwhile, why don't they get their act together and do
this?

The answer is that they will try to implement this only for their own company,
and this will fail. Such a thing could only succeed with a standard that
everyone used.

~~~
toephu2
It is the year 2018, and indeed most DVRs do already provide this
functionality...

~~~
stcredzero
Sure, but the fact that I have to be tethered to an expensive optional device
my living room, subject to a particular walled garden to get not even the full
range of this functionality is pretty backwards. Why can't I just see a random
ad or review somewhere on a web browser or on my phone and have that? The fact
that I'd need a DVR and that it would only work for one company's systems is
backwards considering the wealth of infrastructure that already exists.

------
yalogin
Yeah, I wonder how long till the backlash on Netflix is going to start. It
will happen.

------
otakucode
It would make total sense for Netflix to be worth more than Comcast. They
provide a worthwhile service while Comcast does not. Netflix provides content,
even producing some itself. Comcast does nothing but media distribution. A
clever 12 year old can do global media distribution on their free time for
free. And do it better than Comcast and other large corporations can. They
built their empires when distribution was the hardest problem in the economy
by solving that problem. Now, it's one of the most worthless problems to
solve. It is right and proper that they shrink, fade, and die. If not for
their stranglehold on municipal telecom infrastructure born by government
favors, they would have been eliminated long ago.

~~~
ninkendo
... comcast also is an ISP.

~~~
paulie_a
An incredibly terrible one.

------
shmerl
All the more reasons to enforce Net Neutrality, to ensure that Comcast won't
start ripping Internet users off with caps and zero rating, to compensate for
declining TV user base.

------
paul7986
Hoping here in the US 5G brings all of us more home broadband options whether
through Verizon Wireless, ATT or T-Mobile/Sprint.

We desperately need other options besides just Comcast!

~~~
dsr_
Then go talk to your city or county about building a community ISP.
Competition is the number one driver of higher quality and lower prices.

------
arbitragy
Comcast has an EV (Enterprise value: Debt + Equity or the 'real' acquisition
value of the business) of ~210b versus ~155b for Netflix.

------
Justsignedup
Even if this is true without scrutiny... Netflix literally relies on comcast
for infrastructure.

------
justherefortart
Buy them out, please!

