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Comcast Stock Won’t Win Gold With 2014 Olympics

If anything, the 2014 Olympics are a risk for CMCSA stock

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There has been surprisingly little talk about the athletes, and what discussion there has been don’t bode well for NBC.

Skier Lindsey Vonn, one of the breakout stars from Vancouver, was sidelined from Sochi because of an injury, as were skater Evan Lysack and snowboarder Seth Westcott. Another Vancouver favorite,  snowboarder-turned-fashion mogul Shaun White, is injured as well. He has already withdrawn from one event.

Really, the best hope for CMCSA stock is that Americans will take home a bunch of gold at the 2014 Olympics. But The Wall Street Journal is projecting that Norway will win the most gold medals (33) in the games. No offense to the Norwegian athletes, but Americans probably won’t tune in to watch Martin Sundby go for gold in cross-country skiing.

Comcast and NBC Still Struggling

Comcast has always argued that the Olympics offers a unique promotional opportunity to promote its NBC television network and its array of cable channels such as Bravo, CNBC and MSNBC. But that hasn’t worked in past games, and it probably won’t work for the 2014 Olympics in Sochi.

NBC has struggled in the television ratings for years. Last year, it fell to fifth place in the sweeps period, falling behind Univison. CNBC’s ratings hit a 20-year low in 2013. As for cable news, Fox News attracts more viewers than MSNBC and Time Warner combined.

While rights to the Olympic games are a nice thing to brag about, they aren’t a reason to buy CMCSA stock. In fact, they’re probably more of a liability. The ever-increasing costs for sports programming  are going to make it increasingly difficult for CMCSA and its rivals to make a profit on them.

CMCSA stock, which has surged more than 38% over the past year, is trading at a forward multiple of about 18 — a premium compared to rivals such as Viacom (VIAB), which trades at a 14.6 valuation and Disney, which  trades at 17.

But CMCSA stock does have good things going for it, such as the surprising strength of its video business in the last quarter in the first time ever. If the company is able to join forces with Charter Communications (CHTR) to buy Time Warner (TWC), that would be an even bigger plus.

Prospective investors, however, may want to wait to buy the shares. If the 2014 Olympics turn out to be a gold-medal sized dud, CMCSA stock will become a lot cheaper.

More From the 2014 Olympics

As of this writing, Jonathan Berr did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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