For years I've thought that I wanted to buy Comcast -- dependable revenue stream, semi-monopoly, great margins, but it's never been cheap (10x free cash flow, or less).
Now that Comcast has actually fallen to 10x free cash flow, I'm not so sure I want it anymore. Big competition is coming from the Telcos -- Verizon is marketing is FioS service heavily in Philadelphia area. And customers are cutting back on premium services such as the Soprano-less HBO.
Then, there's agency costs, which tries to value the risk associated with management's ability to re-invest profits at high returns. Management has stated that they'll continue to reduce debt and buyback stock as well as maintain a robust capital expenditure program. This all seems prudent. But, you never know what they'll do from a strategic standpoint.
Maybe I'm wrongly tainted by the negative attitudes about the market, or maybe I'm properly concerned about the economic malaise affecting Comcasts customers and emboldening its competition to step up its efforts. Either way, I'm passing.
