Making good on plans Comcast said it was exploring in October, the cable operator on Wednesday officially announced intent to spin out its cable linear TV networks business into a standalone entity – except for Bravo.
The cable networks being spun out include USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and Golf Channel, as well as digital assets Fandango and Rotten Tomatoes, and GolfNow and Sports Engine.
The Bravo cable network, which features popular franchises like The Real Housewives and Top Chef, as well as the Peacock streaming service, will remain within Comcast and its NBCUniversal unit. And NBCU is holding on to broadcast properties including NBC entertainment, news, and sports, as well as Spanish-language network Telemundo. NBCU also retains its theme parks and film and TV studios business.
Comcast is targeting an approximate one-year timeline to complete the spin-off, which among other factors requires final approval from the company’s board of directors.
The new entity – for now dubbed spinco – will be an independent publicly traded company led by current NBCU Media Group Chairman Mark Lazarus as CEO.
Current NBCU CFO and Comcast EVP of Corporate Strategy Anand Kini will serve as its CFO and COO. In addition to developing an independent strategy, Comcast said the executives will establish the standalone company as a potential partner and acquirer of other complementary media businesses.
In spinning out its cable TV networks business, Comcast said it positions the new entity as a well-capitalized independent company that has scale with a pure-play set of assets that include a set of brands reaching approximately 70 million U.S. households.
“As a standalone company with these outstanding assets, we will be better positioned to serve our audiences and drive shareholder returns in this incredibly dynamic media environment across news, sports and entertainment,” said Lazarus in a statement. “We see a real opportunity to invest and build additional scale and I'm excited about the growth opportunities this transition will unlock. Our financial strength will also provide capacity for an attractive capital return policy while allowing for investment in the growth of these businesses.”
The move comes as the broader linear pay TV market continues to shrink amid subscriber declines (albeit at a slower pace for most in Q3 than the year prior), with a migration to streaming that isn’t likely to abate. Other programmer media companies in the space – namely Warner Bros. Discovery and Paramount each took multi-billion-dollar write-downs on their respective linear TV networks businesses in Q2.
Comcast President Mike Cavanagh during Q3 earnings cited a desire of “playing some offense” as he previously disclosed the company was exploring a spin out.
Cavanagh reiterated the sentiment on Wednesday when officially announcing plans for the separation.
“This transaction positions both SpinCo and NBCUniversal to play offense in a changing media landscape,” said Mike Cavanagh, President of Comcast. “Taken together, the entirety of NBCUniversal will be on a new growth trajectory, fueled by our world-class content, technology, IP, properties and talent – all working in concert with each other as an integrated media company.”
According to Comcast, assets being spun out collectively generated approximately $7 billion in revenue over the last 12 months ending September 30.
Commenting on the potential separation of cable networks last month when Comcast said it was exploring the move, nScreenMedia founder and analyst Colin Dixon told StreamTV Insider it makes sense to move the declining linear assets off of the company’s books.
While acknowledging there’s still value in linear cable networks, Dixon noted that to maximize it might mean making decisions that don’t align with Comcast’s broader interests.
“For example, distributing flavors of the channels on FASTs could boost overall revenue, but hurts the value of Xfinity TV,” the analyst said in October.
As for the move to keep Bravo – Dixon previously said that a spin out could have “profound implications” for Peacock as the streaming service has benefited from next-day content from NBCU-owned networks, including Bravo.
“NBCU pulled assets back from other streaming services to boost Peacock's appeal,” Dixon commented. “If those assets are handled through the spun-out company, it should offer them to the highest bidder. And that might not be Peacock.”
Comcast has also been experimenting with Bravo series on Peacock, such as introducing shoppable and commerce elements on select episodes.
Not wanting to gut Peacock of key content could be part of the reason to keep that network within the Comcast house. In announcing the spin-off, Comcast said it strategically positions NBCU with its NBC broadcast assets and Bravo, “all which power Peacock.”
It also said the spin-off leaves Comcast in a good position to keep investing in its strategic core growth businesses, including residential broadband, wireless, business services, stream, studios and theme parks.