By Daybreak Chmielewski
(Reuters) -Comcast mentioned on Wednesday that it plans to spin-off the majority of its fading NBCUniversal cable TV networks, together with MSNBC and CNBC, as the corporate mentioned it’s repositioning itself for progress within the streaming period.
Shares of the corporate had been off lower than 1% after the announcement that Comcast (NASDAQ:) would separate its leisure and information channels, together with USA Community, Oxygen, E!, Syfy and Golf Channel, into a brand new, publicly traded firm.
Comcast will retain the core of NBCUniversal’s leisure belongings, together with its NBC broadcast community, sports activities and information, its movie and tv studios, and the Bravo community, that are seen as fueling progress for its Peacock streaming service. It additionally plans to maintain the increasing theme park enterprise.
Cowen & Co analysts in a observe mentioned the spin-off might be a precursor to Comcast combining with one other pay TV supplier, resembling Constitution Communications (NASDAQ:), by shedding “toxic” cable channels that could be an impediment to regulatory approval beneath the incoming Trump administration.
Cable tv pioneer John Malone earlier this month instructed buyers that Constitution ought to merge with considered one of its bigger media or telecom rivals to stay aggressive.
The brand new, stand-alone firm, whose cable networks generated $7 billion in annual income, would equally be positioned as an acquirer, or a goal, sources mentioned.
The tax-free spin-off is anticipated to take a yr to finish.
“The most likely buyers of these cable channels are private equity firms or other media conglomerates,” mentioned Emarketer analyst Ross Benes.
“PE would have an easier time hiding financial losses from a purchase than public companies would. PE buyers would cut costs and wrangle out what value is left of the networks, attempting to squeeze out quick profits,” Benes added.
‘STREAMING WON’
Comcast’s resolution comes greater than a decade after it secured full management of NBCUniversal in a collection of offers with Normal Electrical (NYSE:), remodeling the corporate from a cable operator to a media behemoth when such belongings had been enticing.
It marks an inflection level for Comcast CEO Brian Roberts, who earned the nickname “the builder” for the collection of acquisitions that grew the cable enterprise his father based.
Comcast’s cable networks have declined from their heyday, as thousands and thousands of viewers migrated to web streaming providers like Netflix (NASDAQ:), YouTube and Amazon (NASDAQ:) Prime Video.
“The pay TV bundle had a great 30-year plus run,” mentioned Jon Miller, CEO of Built-in Media which focuses on digital media investments. “Things change. Streaming won. That reality is now setting in.”
Nonetheless, Comcast’s cable networks attain 70 million U.S. households, making the brand new firm enticing to buyers, distributors and potential companions.
“The company will have significant cash flow, a strong balance sheet and the financial flexibility to pursue growth opportunities, both organically and through acquisitions,” Comcast President Mike Cavanagh wrote in a memo to staff seen by Reuters.
Activate CEO Michael Wolf predicts the pay TV enterprise will stabilize at about 50 million U.S. households, and proceed to throw off money.
“This is a smart move,” mentioned Wolf. “It allows Comcast to continue to get value out of these cable networks and focus the rest of the business on other areas which have a lot of growth prospects”.
In yet one more deal underscoring the altering panorama of the media business, Comedy Central and Nickelodeon proprietor Paramount World agreed to merge with streaming-era upstart Skydance Media earlier this yr.
Mark Lazarus, who presently serves as chairman of NBCUniversal’s media group, will lead the brand new enterprise as CEO, whereas Anand Kini, CFO of NBCUniversal, would be the working chief and finance head of the brand new firm.
Donna Langley will turn out to be chairman of NBC Common Entertainment & Studios, an expanded function that may give her oversight of all leisure programming. Matt Strauss will turn out to be chairman of NBCUniversal Media Group, the place he’ll proceed to supervise the corporate’s steaming enterprise in addition to NBC Sports activities, advert gross sales and content material distribution.
