On Wednesday, Comcast revealed its intention to split off the majority of its cable television networks into a distinct publicly traded business.
The USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel will all be part of the new business. The cable channel Bravo, the streaming service Peacock, the NBC broadcast network, NBC News, and NBC Sports are among the important NBCUniversal properties that Comcast will keep.
In an internal memo, Comcast President Mike Cavanagh stated that the deal would be set up as a tax-free spin for current shareholders. Although we don’t have a specific timeline, we anticipate that the transition will be finished in about a year.
NBCUniversal, the parent company of NBC News, is owned by Comcast.
The decision was made in the face of significant economic challenges to the traditional cable television package, chief among them being the increase in cord-cutting and the move to streaming alternatives. Comcast’s cable business continues to boost its profit line and broaden its cultural reach.
Given the strength of its portfolio and the caliber and focus of its management team, the independent, well-capitalized firm will be well-positioned to lead in the evolving cable networks landscape, according to Cavanagh.
According to Cavanagh, the new business, now referred to as SpinCo, will have substantial cash flow, a solid balance sheet, and the financial freedom to pursue expansion prospects both naturally and maybe through acquisitions.
Mark Lazarus, the chairman of NBCUniversal’s media group, will be in charge of the new business, according to Cavanagh. The chief operational officer and CFO will be Anand Kini, the former chief financial officer of NBCUniversal.
Two persons with knowledge of the situation confirmed the plot to NBC Newson on Tuesday after it was initially revealed by The Wall Street Journal.
The separation of MSNBC and CNBC from NBC News’s core newsgathering operations is one of the noteworthy aspects of the new business structure. Whether the network’s core news division and cable news channels would continue to share editorial resources was not immediately apparent.
The spinoff step is attractive to investors, according to an email from Dan Ives, a managing director and senior equities research analyst covering the technology sector at Wedbush Securities. In premarket trading on Wednesday, Comcast’s stock price increased by almost 0.5 percent.
We think this will be a wise strategic move for Comcast and the new spinoff with golden gem cable assets like CNBC and MSNBC, which is what The Street wants to see,” he said. The cord cutting dynamic is a headwind but we see brighter days ahead as cable defines a new monetization and streaming path with subscriptions and content to build on its strong advertising base looking forward.
In an appearance on CNBC, media and technology analyst Rich Greenfield, who frequently attacks media firms for what he sees as a tardy response to cord-cutting, put the move bluntly: Comcast has made a rather direct and unambiguous remark.
According to Greenfield, a co-founder of the research firm LightShed Partners, they are leaving the cable network industry. This is their way of indicating that we don’t want to work in this industry. This company is no longer growing. Although it will continue to exist for a while, it is no longer a growing company.
Cavanagh on Wednesday also announced a reorganized leadership team for NBCUniversal.
Cesar Conde will continue leading the NBCUniversal News Group as chairman. The division includes NBC News, the NBC News Now streaming product, Telemundo and the company s owned-and-operated local stations. Cavanagh added Conde will work closely with me on other growth opportunities for NBCUniversal.
Donna Langley will become chair of NBCUniversal Entertainment & Studios, a role that will give her broad oversight over all entertainment programming and marketing across NBC, Peacock and Bravo, as well as the company s film and television studios.
Matt Strauss will become chairman of the NBCUniversal Media Group. Mark Woodbury will continue in his role as chairman and chief executive officer of Universal Destinations & Experiences, the unit that runs the theme parks and global consumer products business.
Comcastagreed to buy a majority stake in NBCUniversal from General Electric in 2009, combining one of the country s largest operators of cable TV with the sizable NBC media and entertainment operation. The cable channels were seen as a particularly lucrative acquisition.
Since then, the rise of streaming entertainment has eaten into the cable television business, leading to waves of consumers canceling their cable subscriptions in favor of platforms such as Netflix and Amazon Prime Video.
In this environment, many cable channels are still profitable businesses, with some continuing to generate strong cash flows for their corporate owners. But the media industry writ large considers the cable marketplace to be in decline.
Comcast, like other leading media conglomerates, has invested heavily in streaming. Peacock, home to a large library of NBCUniversal content and programming licensed from other studios, added 3 million subscribers during the third fiscal quarter, according to the company s most recent earnings report. Comcast lost 365,000 cable customers during that period.
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