Just finishing up a busy week with NBCUniversal. It started Sunday afternoon with a trip to New York. I brought my soon to be married daughter with me. This would be the last daddy daughter date before the big marriage when Jessica marries Davis and is no longer daddy’s little girl. If you haven’t done that before as a father, trust me it’s hard. This is my second and last daughter to get married.
Over the years I have taken all of my 7 children on trips with me. All of them have been able to come with me on outings to Europe and all but Jonah have been to New York (Jonah doesn’t like to travel). This was Jessica’s 4th and last daddy daughter trip. Oh yeah this is a blog about NBCUniversal training.
The two classes in New York went great. I really like these people and the facilities at 30 Rock, New York and Hollywood are top notch. I really enjoy working with the NBCUniversal staff too, they are very professional and well organized. The attendees are nominated as potential business leaders and are therefore pretty bright. Always great discussions and interactions.
One of the most talked about numbers at NBCUniversal since Comcast acquired them is OCF or operating cash flow. That is their key number that is pushed to analysts on Wall Street and to managers internally. The interesting thing is OCF as it is presented is actually EBITDA or Earnings Before Interest, Taxes, Depreciation, and Amortization. They also present free cash flow but that number is actually true free cash flow which is operating cash flow.
In class we calculated operating margin for NBCUniversal for 2015 which is 16.9%. Then we look at the same number for Comcast which is over 21%. In the Hollywood class one student calculated Comcast’s operating margin without NBCUniversal and it would have been over 24%. Now many companies don’t like to retain lower margin businesses in their portfolio. The argument is they drive down share value…think GE. So we discussed in class why did higher margin Comcast acquire NBCUniversal. The standard answer is Comcast needed more content to protect its shrinking cable business. But we discovered in class another interesting point.
NBCUniversal represents about 35% of Comcast revenue of about $75 billion. In terms of free cash flow NBCUniversal represented 42% of free cash flow or $3.7 billion of $8.9 billion. Since free cash flow is a key number for investors and analysts, the acquisition makes sense from a cash flow standpoint as well.
I’m calling the trip a success. Jessica & I were lucky enough to get standing room tickets to the long sold out Hamilton play on Broadway (actually great standing seats dead center in the orchestra level). In Hollywood I was able to experience the Walking Dead attraction in the park. Pretty cool seeing Hamilton on Broadway and the Walking Dead all on the same trip. Thanks for coming Jessica I’ll miss these daddy daughter trips in the future.