On November 21, 2024, Comcast Corporation announced a plan to spin off most of its cable television networks into a separate publicly traded company. The new company will include USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel. Comcast will retain NBCUniversal’s major assets, including NBC broadcast network, NBC News, NBC Sports, streaming service Peacock, and cable channel Bravo.
Comcast CEO Mike Cavanagh stated in an internal memo that the transaction will be carried out as a tax-free spin-off for existing shareholders, although the exact timeline for the transition has not been finalized, it is estimated to take approximately a year. Comcast owns the parent company of NBC News, NBCUniversal.
This move comes as traditional cable TV bundling business is facing challenging economic conditions, especially with decreasing subscribers shifting towards streaming alternatives. Despite its cable TV business portfolio still contributing to its financial bottom line, Comcast aims to expand its cultural influence.
Cavanagh mentioned that the well-funded independent company will be able to take a leading position in the evolving landscape of cable television networks, given the strength of its business portfolio and the quality and focus of its management team.
The new company, tentatively named “SpinCo,” is expected to possess substantial cash flow, a solid balance sheet, and financial flexibility to seek growth opportunities organically or through acquisitions.
Cavanagh announced that the new company will be led by Mark Lazarus, Chairman of NBCUniversal Media Group. Anand Kini, NBCUniversal’s CFO, will serve as Chief Financial Officer and Chief Operating Officer of the new company.
The new business structure is notable as it separates MSNBC and CNBC from NBC News’ core news gathering business. It remains unclear if the cable news channels and networks will continue to share editorial resources.
Dan Ives, Managing Director and Senior Equity Research Analyst covering the tech sector at Wedbush Securities, expressed in an email that the spin-off move is appealing to investors. Comcast’s stock rose about 0.5% in pre-market trading on Wednesday.
Ives noted that Wall Street favors this initiative, considering it a wise strategic move for both Comcast and the new spin-off company. While cable TV subscriber losses pose a challenge, the future outlook is optimistic with cable TV exploring new paths for profitability and streaming, building upon its strong foundation in advertising.
Rich Greenfield, Co-Founder of research firm LightShed Partners and a media and tech analyst, who often criticizes media companies for their slow response to cable TV subscriber losses, commended Comcast’s clear and direct statement regarding the exit from the cable TV network business.
Comcast’s announcement signifies a shift away from the non-growing business of cable TV networks in response to the industry’s changing landscape. Despite the continued presence of this business for some time, it no longer offers growth prospects.
Cavanagh also unveiled the restructured leadership team of NBCUniversal on Wednesday. In 2009, Comcast agreed to acquire the majority stake of NBCUniversal from General Electric, merging one of the largest cable TV operators in the United States with the extensive NBC media entertainment business. At that time, cable TV channels were seen as particularly lucrative acquisition targets.
Since then, the rise of streaming entertainment has eroded the cable TV business, with consumers increasingly canceling cable TV subscriptions in favor of platforms like Netflix and Amazon Prime Video.
Although many cable TV channels remain profitable, some continue to generate strong cash flow for their corporate owners. However, the entire media industry acknowledges that the cable TV market is in decline.
Comcast was founded in 1963 when Ralph J. Roberts, along with his business partners Daniel Aaron and Julian A. Brodsky, purchased American Cable Systems for $500,000. In 1965, American Cable Systems acquired Storecast Corporation of America, a professional marketing company specializing in supermarket layouts, and bought the first set of Muzak licenses in Orlando, Florida. The company was subsequently reregistered as Comcast Corporation in Pennsylvania in 1969. In 1972, Comcast Corporation went public.
(Information sourced from reports by NBC News)