Technology

Comcast separates from cable business to strengthen growth areas

Comcast spins off its cable business to focus on high-growth segments such as streaming and theme parks.

Eulerpool News Nov 21, 2024, 3:24 PM

Comcast plans to spin off its cable networks like CNBC and MSNBC to decouple the company's high-growth areas – studios, theme parks, and streaming services – from the decline of traditional television.

The cable networks, including E!, Syfy, Oxygen, and USA Network, are suffering from the trend of "cord-cutting," where consumers abandon linear television in favor of streaming services. On Wednesday, Comcast announced it would spin off these networks as well as the websites Fandango and Rotten Tomatoes into a new publicly traded company generating annual revenue of around $7 billion.

“This transaction positions both ‘SpinCo’ and NBCUniversal offensively in a changing media landscape,” said Comcast President Mike Cavanagh. The restructuring is a response to the ongoing decline of the cable business, which has been extremely profitable for decades. As recently as August, Paramount and Warner Bros Discovery wrote down the valuation of their cable channels by $6 billion and $9 billion, respectively.

Warner Bros also examined spin-offs and other structures in the summer to isolate its traditional TV businesses, reported the Financial Times. Industry experts like Rich Greenfield of LightShed Partners called cable channels "ballast for media companies.

Without the cable business, the newly established NBCUniversal group is expected to operate with robust revenue and low debt. This enables investment in digital assets, studios, or networks. "Like many of our competitors, we feel the transition in our video business and are looking for the best way forward," Cavanagh told analysts back in October.

Dame Donna Langley, previously in charge of NBCU Studios and Chief Content Officer, will lead the new NBCUniversal Entertainment Group as Chair. Matt Strauss, previously head of the streaming service Peacock, takes on the position of Chair for NBCU Media and is responsible for distribution and programming. The new company will also hold rights to major sports broadcasts such as the NBA, NFL, and the Olympic Games.

The cable networks are to be spun off to shareholders in a tax-free spin-off. Comcast expects the transaction to be completed in about a year. Mark Lazarus, Chairman of NBCUniversal Media Group, will take over the management of the new "SpinCo.

Brian Roberts, Comcast chairman and CEO, will neither be represented on the board nor in the management of the new company, but will hold 33 percent of the voting rights.

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