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Comcast is close to announcing a plan to spin off its cable television networks, including news channels CNBC and MSNBC, in a move designed to position its remaining entertainment and sports assets as a faster-growing business better suited to compete in the streaming era.
Comcast’s cable TV networks, which also include E!, Syfy, Oxygen and USA Network, have suffered as “cord-cutting” consumers favour streaming services.
The company’s other entertainment businesses — a portfolio that ranges from Universal Studios and theme parks to the NBC broadcast network and the Peacock streaming service — will be able to “invest in growth” without the drag of the cable businesses, according to a person familiar with the plan.
Mike Cavanaugh, Comcast’s president, said last month that the company was exploring the idea of spinning off the cable networks. Comcast is expected to announce the move on Wednesday morning, according to two people familiar with the plan. The Wall Street Journal first reported the details.
The move by one of America’s largest media conglomerates is the latest acknowledgment of the collapse of cable, an enormously profitable business for decades. In August, Paramount and Warner Bros Discovery wrote down the valuations of their cable channels by $6bn and $9bn, respectively. Cable television channels have become “anchors around the necks” of media companies, LightShed analyst Rich Greenfield wrote at the time.
Warner Bros has also explored spin-offs and other structures to isolate its legacy cable TV networks, the Financial Times reported in July.
Without the cable business, the newly constituted NBCUniversal entertainment group is expected to have healthy revenue without much debt, allowing it to pursue acquisitions of other digital assets, studios or networks.
“Like many of our peers in media, we are experiencing the effects of the transition in our video businesses and have been studying the best path forward for these assets,” Cavanagh told analysts last month.
“The idea of playing some offence when you combine the balance sheet strength that we have, the assets we have and the management team we have — there may be some smart things to do,” he added.
Comcast shares jumped as much as 9 per cent after his comments on October 31.
Dame Donna Langley, who has led the NBCU studios and served as chief content officer, will run the new entertainment group as chair of the NBCUniversal Media Group. Matt Strauss, who has been running the Peacock streaming service, will become chair of the NBCU Media group, overseeing distribution and programming agreements.
The entertainment group will hold a broad portfolio of sporting rights, including with the NBA, NFL and Olympics.
The cable television networks, which have $7bn in assets, will be spun off to shareholders in a tax-free transaction. Mark Lazarus, chair of the NBCUniversal Media Group, will run the cable TV group. Structuring the new company is expected to take about a year.
Brian Roberts, Comcast chair and chief executive, will not serve on the board or as a member of the new company’s management, but will hold a 33 per cent voting stake.