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Comcast Corporation (CMCSA), Yahoo! Inc. (YHOO): Can Fantasy Sports Drive Your Portfolio Higher?

Risk and a little uncertainty make an investment exciting. The same is true with fantasy sports. Not only is fantasy sports fun, but it can be lucrative as well. Fantasy sports is a fast-growing business. According to the Fantasy Sports Trade Association, an estimated 35 million online users wager money on fantasy sports. The new trend in fantasy sports is allowing participants to draft a team, place a wager, and get paid, all in one day rather than only once a season.

This industry is growing at triple digit rates. Investors should consider not just playing for the fun, but investing for gains. I see some big companies doing big things in this arena, particularly Comcast Corporation (NASDAQ:CMCSA), Time Warner Inc (NYSE:TWX) and Yahoo! Inc. (NASDAQ:YHOO).

The new entrant

Comcast Corporation (NASDAQ:CMCSA) saw the promising possibilities of online gaming and fantasy sports last year. A sizable $11 million investment led Comcast Ventures into Series C financing for FanDuel, a fantasy sports site.

Comcast Corporation (NASDAQ:CMCSA) stock is currently hovering around $44. The company has a market cap of $116.68 billion and still gets the majority of its revenue from its solid grip on the media industry. Like any strategic business, it leverages this strength in order to firmly enter new spaces. Not only did it invest in FanDuel, but it has also teamed with various entertainment companies to offer premium gaming services as part of its pay cable package – a wise move that could benefit investors handsomely in the seasons to follow.

The overloaded giant

Comcast Corporation (NASDAQ:CMCSA) isn’t the only company to actively making inroads into this market. Time Warner Cable is making a play here as well, though it is also making several other moves, which could hurt its chances in the fantasy sports arena.

Time Warner Cable Inc (NYSE:TWC) has seen increasing earnings and revenue figures over the last four quarters. Currently trading around $115, just under its 52-week high of $119.46, the stock has a P/E of 16.33. It would benefit Time Warner Cable to continue using its cable and TV packages to enter the fantasy sports market just as Comcast Corporation (NASDAQ:CMCSA) is doing; however, it is simultaneously in negotiations to acquire a stake in Hulu, even after Hulu’s owners — Comcast, Disney, and 21st Century Fox — announced the site was no longer for sale. Reports state that the company wants to acquire a 25% stake in the online television streaming brand.

In terms of fantasy sports growth, Time Warner Cable is missing an opportunity and will subsequently lose ground to Comcast. The industry is relatively new and dominant companies have the ability to shut out a competitor at this early stage. Time Warner Cable and Comcast could control the board rather than succumbing to online players. The key factors to developing a successful fantasy sports empire would be to present easy and accessible user interaction (like Comcast is doing), or grow consumer awareness like the online players are doing. While I don’t think Time Warner Cable’s failure in this area will negatively impact its stock, I do think it will impede its revenue growth.

The juggernaut

Yahoo! Inc. (NASDAQ:YHOO) is no stranger to fantasy sports. In fact, fantasy sports is a big money maker for the company. Yahoo! Inc. (NASDAQ:YHOO) recently acquired mobile fantasy sports startup Bignoggins, the company behind Fantasy Monster and Draft Monster. Fantasy Monster is an app that allows users to manage multiple fantasy sports teams. It allows users to access stats, aggregate data and manage all major fantasy sports.

The key for Yahoo! Inc. (NASDAQ:YHOO) in terms of fantasy sports growth is its mobile push from CEO Marissa Mayer. This is highlighted by her announcement in early 2013 to streamline Yahoo!’s mobile apps and focus on product refinement. The big opportunity here is that nearly 30% of players used their mobile device to participate in fantasy sports in 2011, and this growth is only going to continue. In addition, fantasy sports is widely used as a second screen during NFL games. Bignoggins could be the next big thing for Yahoo! Inc. (NASDAQ:YHOO)’s fantasy sports growth.

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