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Cable television broadcasting industry

Comcast Bids $2.1 Billion for QVC as CBS Merger Falters

Strategic Insights

— 1 min read

Comcast's offer to acquire QVC for $2.1 billion upstaged a planned merger with CBS, casting doubts on the future of the CBS-QVC deal. The bid, backed by Comcast's 15.5% stake in QVC, has stunned the entertainment industry, with CBS chairman Laurence Tisch stating that the merger discussion is effectively over. Comcast's move seeks to prevent QVC's chairman, Barry Diller, from aligning his cable television home-shopping channel with a network broadcasting company, an arrangement Comcast finds undesirable due to federal regulations limiting cable company ownership in television broadcasters.

Key Takeaways:

  • Comcast's bid for QVC, worth approximately $44 per share, is higher than the terms of the CBS-QVC merger, which values QVC stock at about $38 a share.
  • The Comcast bid has effectively scuttled the QVC merger, with CBS chairman Laurence Tisch stating that the merger discussion is at an end.
  • Comcast, which owns 15.5% of QVC, is reluctant to have an interest in the over-the-air television business due to federal regulations.
  • QVC officials will consider Comcast's offer today at a board meeting.
  • Comcast's president, Brian Roberts, stated that his company simply does not want to be minority investors in CBS, due to its own vision for Comcast not aligning with the strategy behind the CBS-QVC merger.
  • Comcast's bid has also raised concerns among other QVC shareholders, including Time Warner, which holds an 8.9% stake in QVC.
  • The Comcast bid may have been influenced by the company's desire to maintain its focus on cable television and not expand into the over-the-air television business.
  • The CBS-QVC merger plan was announced 12 days ago, and since then, Comcast executives have increasingly expressed their unhappiness with the deal.

Statistics:

  • CBS earned $109.3 million in net income for its second quarter, up 1.7% from $107.4 million a year earlier.
  • CBS' operating income rose 14% to $174.3 million, led by increased advertising revenue from its network operation.
  • CBS' sales rose 5.6% to $882.6 million.
  • Comcast's revenue was $1.3 billion last year, making it only the No. 3 among U.S. cable television operators, behind Tele-Communications Inc. and Time Warner Inc.

Sources:

  • New York Times Service, by Geraldine Fabrikant

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