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Why Has Comcast’s Atairos Invested in Groupon?

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Comcast’s investment in Groupon

On April 4, 2016, Bloomberg Technology reported that Comcast’s (CMCSA) venture capital company Atairos had invested $250 million in Groupon (GRPN). Comcast has stated that the two companies will “identify and implement potential strategic partnership opportunities.”

Atairos was created last year, when Comcast invested $4 billion into the company. Atairos was set up by Comcast’s former chief financial officer Michael Angelakis. Angelakis invested another $40 million into Atairos in a personal capacity.

Comcast Cable’s CEO Neil Smit stated, “The potential in combining Groupon’s local expertise with Comcast’s vast subscriber and advertiser network is something we look forward to closely exploring together.”

Groupon is an online marketplace that is connecting local businesses with customers. Groupon’s partnership with Comcast could work well for Comcast’s advertising business.

Comcast Spotlight is Comcast Cable’s advertising sales division. It’s present in 80 markets in the United States. Local businesses could harness both Groupon and Comcast’s Spotlight to reach more customers across the United States.

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Comcast Cable’s advertising business in fiscal 4Q15 and 2015

As the above chart indicates, Comcast Cable’s advertising business had a 5% share of Comcast Cable’s total revenue of $11.9 billion in 4Q15, with advertising revenue of $639 million. Comcast Cable’s advertising revenue saw a fall of 9.3% in 4Q15 due to a dip in political advertising.

However, Comcast stated in its 4Q15 and 2015 earnings call that considering the strong scatter advertising market in 2015, it remained optimistic about growth in advertising revenue for 2016.

Comcast is also investing in advertising technology to boost its advertising revenue. Comcast’s Canoe delivered 11 billion video on demand ad impressions in 2015. Canoe is an advertising technology company that inserts ads dynamically on linear television networks. Besides Comcast, Canoe is jointly owned by Cox, Time Warner Cable (TWC), and Brighthouse Networks.

Other media companies that are also increasingly investing in advertising technology include Viacom (VIAB) with its Vantage data analytics platform and 21st Century Fox (FOXA) with TrueX.

Comcast accounts for 2.9% of the PowerShares QQQ Trust, Series 1 ETF (QQQ). QQQ has 4.8% exposure to the television sector.

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