Will Comcast Feel the Heat Due to Brexit?



IImpact on Comcast’s movie business

Comcast’s (CMCSA) movie, The Secret Life of Pets released in the United Kingdom on June 24. However, Brexit could impact the movie’s earnings at box offices in the United Kingdom. Brexit hastened the decline of the pound against the dollar. The pound has fallen by around 9.6% against the US dollar (UUP) in the past month.

According to a Los Angeles Times report from June 24, citing a 2015 report from the Motion Picture Association of America, the United Kingdom was the third-largest movie market in the world for Hollywood movies in 2015.

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The decline in the United Kingdom’s currency could also disrupt Comcast’s Universal Studios programming production budget in the United Kingdom. The Los Angeles Times report also stated that many Hollywood studios prefer to produce programming in the United Kingdom because the country offers a 25% tax incentive to studios.

As the above chart indicates, theatrical distribution accounted for 17.1% of Comcast’s filmed entertainment revenues in 1Q16. Content licensing revenues accounted for 47.1%, or $652 million, of the filmed entertainment segment’s total revenues in 1Q16.

Brexit could impact Comcast’s theme parks business

Comcast could experience a strong impact from Brexit when it comes to the company’s theme parks. It could mean a decline in the inflow of tourists from the United Kingdom at the company’s theme parks in the US. This could translate to lower per capita guest spending at the company’s theme parks. It could also be impacted negatively due to the pound’s fall against the dollar (UUP).

Comcast makes up 0.8% of the SPDR S&P 500 ETF (SPY). SPY has an exposure of 3.4% to the media sector. SPY also holds 0.2% of Netflix (NFLX), 0.7% of The Walt Disney Company (DIS), and 0.3% of Time Warner (TWX).


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