Activist Trian Fund Management Takes Stake in Comcast

DEALS Activist Trian Fund Management Takes Stake in Comcast

Trian, Comcast executives recently began conversations

By Corrie Driebusch and Lillian Rizzo ity-branded broadband and pay-TV unit, NBCUniversal, was also hit by the the NBCUniversal entertainment unit and pandemic, with its revenue dropping 25% Trian Fund Management LP, a hedge Sky, a U.K.-based satellite-TV operator and due to the halt of theatrical releases, the fund known for pushing big companies entertainment company. temporary closure of its theme parks and to make operational and other changes, Trian confirmed the stake in a securities a sharp decline in advertising on its broad- has launched an activist campaign against filing, disclosing ownership of roughly 7.2 cast and TV networks. Comcast Corp. in a bet that the cable-TV million Comcast shares as of the end of the Unlike NBC and Sky, Comcast’s broad- and entertainment giant’s stock is under- second quarter. The stake has since grown band business is growing at a fast clip, valued. to roughly 20 million. and Mr. Roberts recently said he expects Trian has accumulated about 20 million “We have recently begun what we third-quarter subscriber growth to set shares in Philadelphia-based Comcast, for believe are constructive discussions with a record. At a conference last week, Mr. a roughly $900 million stake or about 0.4% Comcast’s management team and look Roberts said there will likely be more than of the company, a person familiar with the forward to continuing those discussions,” 500,000 broadband customer additions in matter said. Comcast’s market value is Trian said. the period. about $200 billion. A Comcast spokeswoman didn’t have an “The cable business is an infrastructure Executives at Trian, which was founded immediate comment. asset with steady growth and very high free by Nelson Peltz, Ed Garden and Peter May, Comcast’s stock jumped more than 2% cash flow,” said MoffettNathanson analyst recently began conversations with Comcast on the news, though it ended Monday down Craig Moffett, referring to Comcast’s management, the hedge fund said in a statement Monday, confirming an earlier 1.3% at $44.68. broadband, pay-TV and phone unit. “The report by The Wall Street Journal. It isn’t Comcast earlier faced criticism from other two businesses, Sky and NBC, are clear what exactly Trian is focused on investors and analysts who believe it over- sort of cyclical turnaround stories. They beyond a belief that Comcast shares are paid for Sky, which the company acquired naturally appeal to entirely different types undervalued. for $38.8 billion roughly two years ago. of investors.” Trian is known for encouraging changes The purchase price rose significantly due He added: “I can’t imagine a shareholder at companies it targets, such as a breakup to a bidding war with 21st Century Fox Inc., that would disagree that this company or sale of underperforming divisions or which ended with a blind auction in which would be valued more highly if it were moves to improve efficiency and better use neither party knew what the other had separated into pieces.” capital. It often seeks board representation offered. Comcast ended up offering £7.28 NBCUniversal Chief Executive Jeff Shell and tries to avoid public spats, unlike some a share, equivalent to $22.32, surpassing has been pursuing a major reorganization of its more pugnacious rivals. Fox’s offer of £5.67. centered around the growth of the compa- Trian, which manages roughly $8.8 Comcast’s quest for Sky came after it ny’s new subscription streaming-video billion, is accustomed to hunting large lost a bidding war with Walt Disney Co. service, Peacock. prey, having targeted companies including for Fox’s entertainment assets, which went That has entailed layoffs and other cost- Procter & Gamble Co., DuPont de Nemours for $71 billion. The Fox assets not sold to cutting measures. The company is creating Inc. and General Electric Co. Disney are now known as Fox Corp., which a centralized unit to decide which program- But forcing change at Comcast— shares common ownership with Journal ming to create and which networks or assuming that is what Trian tries to do— parent News Corp. digital platforms should distribute it, a could be difficult. The family of Brian Sky’s business was heavily hit by the major shift from the entertainment indus- Roberts, its chairman and chief executive, coronavirus pandemic, with revenue drop- try’s traditional approach of empowering holds a significant voting stake in Comcast. ping by 16% in the second quarter as adver- the management at individual TV channels. Its stock has performed relatively well and tising revenue plunged by 43%. Peacock was the latest effort by a media hit an all-time high before the onset of the At the time of the Sky deal, Comcast and technology giant to catch up with coronavirus pandemic, which briefly sent it executives said it would lift the company’s Netflix Inc., the subscription-streaming down sharply. The shares have since recov- user base and boost its ability to invest service that has a long lead on many of its ered as Comcast’s broadband business has in technology, programming and valuable competitors. Disney, Apple Inc., AT&T Inc. held up well in the pandemic. sports-media rights. and Comcast have all launched streaming Comcast’s businesses include the Xfin- Comcast’s main entertainment unit, services over the past year.

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