Will 2016 Be Comcast Corporation's Best Year Yet?

By Daniel B. KlineFool.com

Comcast had a mixed 2015.

Continue Reading Below

On the negative side, the company saw federal regulators refuse to approve its planned acquisition of Time Warner Cable. That deal would have made Comcast the unquestioned leader among pay-television companies and Internet service providers. Losing TWC -- and then seeing rivalCharter Communications snap it up -- was a significant setback.

In addition, the company continued to struggle with customer service problems. Those issues led to a number of embarrassing news stories, and ultimately to the company publicly pledging to totally revamp how it handles its interactions with subscribers, at a great expense.

Those negative stories, however, were perhaps outweighed by the good news delivered by Comcast's entertainment properties. Specifically, Universal Pictures had a banner year, with three films --Minions,Furious 7, andJurassic World -- exceeding $1 billion in global box office. In addition, the company experienced record attendance at its theme parks, and NBC once again led the primetime ratings pack among the key 18-to-49 demographic.

It was a year that left investors a bit baffled. Despite those strong performances by the movie and theme parks businesses, and the cable/Internet side showing surprising resilience, Comcast stock closed at $56.46 on Dec. 21, slightly below its 2015 opening trading price of $58.

That's likely due to disappointment over the TWC deal being scuttled as well as general market fears about the future of the cable space. Still, stock price aside, 2015 was largely a strong year for Comcast -- but does that set the company up for its best year ever in 2016?

Source: YCharts.com

Cinematic successes will be a tough act to followWhile Comcast's Universal Studios had unparalleled success in 2015, it will have a hard time equaling that level of success in 2016. The problem is that its franchises with billion-dollar potential will not be releasing films during the next 12 months.

Even surefire hits like Matt Damon returning as Jason Bourne andNeighbors 2 should deliver closer to $300 million to $400 million based on where the previous films in each series performed. The same could be said of sequels toSnow White and the HuntsmanandMy Big Fat Greek Wedding.

It's nearly impossible to expect Universal to equal 2015 in 2016, though 2017 might shatter all previous records.

Theme parks remain strongUniversal Studios theme parks had a strong 2015 -- or at least, they've done well in the three quarters the company has reported on so far. For the nine-month period that endedSept. 30, revenue from its Florida and California parks increased 22.9% to$2.3 billioncompared to$1.9 billionin 2014, while operating cash flow increased 31.8% to$1.1 billion.

It's reasonable to expect that the company will build on those numbers due to the launch of aHarry Potter-themed attraction in California and the continued strength of its two Potter "lands" in Florida. But, because theme parks account for such a small fraction of overall revenue ($2.3 billion out of $55.2 billion for the first three quarters) even a similar year-over-year increase won't be a game changer for the company.

Cable, Internet, and televisionWhile the movie business is cyclical, the cable and broadcast end of Comcast faces steady downward pressure. Cord-cutting may not be happening as fast as once was predicted, but it could increase and that's a sword hanging over the company's pay-television business, its cable channels, and NBC.

Comcast has done a good job of increasing its revenue per subscriber and growing its ISP business to offset its dwindling cable subscriber base, and it will likely continue to do that. But there's only so much blood you can get out of a stone. Pay TV and owning networks and cable channels are not likely to be growth businesses in 2016. Providing Internet service might be, but the segments combined will likely tread water at best, or lose a little ground.

It looks to be a good, not great yearLosing the Time Warner Cable deal scuttled any chance that 2016 would beComcast's best year ever. The company will struggle to match this year's record box office take, and its core pay-television business will likely slowly bleed subscribers. It likely won't be a bad year, but market conditions have simply put too many roadblocks in front of the company.

It's unlikely Comcast's 2016 will equal its 2015, let alone deliver a new record for the company.

The article Will 2016 Be Comcast Corporation's Best Year Yet? originally appeared on Fool.com.

Daniel Kline has no position in any stocks mentioned. He liked the Jason Bourne books but not the movies. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.