Massive disruption in US media industry, Comcast to spin off cable channels
Comcast announced that the new entity will include USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel, along with several “complementary digital assets” such as Fandango, Rotten Tomatoes, GolfNow, and SportsEngine.
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On Wednesday morning, Comcast confirmed that it will spin off most of its cable channels, including MSNBC and CNBC, into a separate publicly traded company. The new company has not been formally named yet. Comcast announced that the new entity will include USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and the Golf Channel, along with several “complementary digital assets” such as Fandango, Rotten Tomatoes, GolfNow, and SportsEngine.
The majority of NBCUniversal, including the NBC broadcast network, its movie studio, and theme parks, will remain under Comcast’s ownership.
In an internal memo on Wednesday, Comcast President Mike Cavanagh stated that the tax-free transaction, expected to take about a year to complete, “positions both SpinCo and NBCUniversal to play offense in a changing media landscape.”
Analysts believe that spinning off the cable properties could facilitate future divestitures, bringing Comcast more in line with competitors like Warner Bros. Discovery and Paramount Global, which have recently adjusted their cable strategies. Comcast’s broadband and streaming businesses, which are key profitability drivers, are likely to benefit from this restructuring.
Comcast’s streaming platform, Peacock, continues to see strong growth. It gained 3 million net subscribers in the third quarter, raising its total to 36 million. Peacock’s revenue increased by 82% year-over-year to $1.5 billion, fueled by major events such as the Olympics and NFL games.
The Bank of America analyst analyst on Thursday said Comcast Corp decision to spin off its cable networks, excluding Bravo, and some digital assets into a separate company, was a “positive strategic step”. Analyst believes the move will allow Comcast to focus on higher-growth segments by separating slower-growing cable assets. The newly formed company is expected to acquire additional cable networks to achieve scale and drive growth.
The spin-off is also expected to return capital to shareholders through dividends or share repurchases.
