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Twenty First Century Fox (FOXA) Exec Worries About Comcast Broadband Domination

NEW YORK (TheStreet) -- An executive at 21st Century Fox  (FOXA) has come out in opposition to the proposed Comcast  (CMCSA) and Time Warner Cable (TWC) merger.

Chase Carey, Fox's president and COO, stated his misgivings during an investors conference today. Carey's main concern was how the deal would allow Comcast to dominate the broadband market and thus control the flow of media to a large share of the market.

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The merger would make Comcast the internet provider for 40% of the United States. Carey commented that, "Probably the issue that will come out of it, and that will ultimately get focused on, is really the broadband issue. Is there choice in broadband? Are you really headed toward every home having simply one broadband provider, and what are the implications of that?"

The implications for his brand could potentially be shoddy access to 21st Century Fox products due to the Federal Communication Commission's recent ruling against net neutrality. Comcast, which recently bought Fox rival NBC Universal from GE, would be in a position to slow the streaming of Fox programs to 40% of the country while increasing access to NBC Universal programming. 

The proposed $42 billion all-stock merger has only not been ruled upon by the FCC yet.

TheStreet Ratings team rates TWENTY-FIRST CENTURY FOX INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TWENTY-FIRST CENTURY FOX INC (FOXA) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Media industry and the overall market, TWENTY-FIRST CENTURY FOX INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 178.54% to $727.00 million when compared to the same quarter last year. In addition, TWENTY-FIRST CENTURY FOX INC has also vastly surpassed the industry average cash flow growth rate of -11.37%.
  • You can view the full analysis from the report here: FOXA Ratings Report
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