Comcast is expected to move forward with a plan to spin off its portfolio of cable networks, which includes MSNBC, CNBC, USA, Oxygen True Crime, E!, Syfy and the Golf Channel, into an independent, publicly traded company, TheWrap has learned. A formal announcement is expected on Wednesday.
The move, first reported by The Wall Street Journal, is expected to be organized as a tax-exempt subsidiary for Comcast shareholders and will take about a year to complete. The company’s ownership structure will see Comcast Chairman and CEO Brian Roberts hold a one-third voting interest, although he will not be on the board of directors of the separate entity.
Mark Lazarus, chairman of NBCUniversal Media Group, is expected to lead the company as CEO, while Anand Kini, NBCU’s CFO, will serve as CFO and COO of the spun-off entity. Chief content officer Donna Langley will become president of NBCUniversal Studios and Entertainment, gaining more control over content production and spending, while Matt Strauss, president of direct-to-consumer marketing, will succeed Lazarus as president of NBCUniversal Media Group. Cesar Conde will remain president of NBCUniversal News Group, while Executive Vice President Adam Miller will become NBCU’s Chief Operating Officer.
Bravo, known for reality series such as The Real Housewives, will remain on Comcast’s network, along with Peacock and the NBC broadcast network.
According to the magazine, the cable network portfolio generated about $7 billion in revenue during the 12-month period ending Sept. 30. Comcast representatives declined to comment.
Comcast first revealed that it was exploring the possibility of a spin-off of its cable network portfolio during its third-quarter earnings call last month.
Comcast President Mike Cavanagh told analysts at the time: “Like many of our media peers, we are seeing the effects of the transformation of our video business and are considering the best path forward for these assets.” “To that end, we are now exploring whether the creation of a well-capitalized new company owned by our shareholders and comprised of our strong portfolio of cable networks would position them to capitalize on opportunities in the changing media landscape and create value for our shareholders. “We are not ready to talk about any specific details yet, but we will get back to you when we come to firm conclusions.”
Kavanagh declined to say how a potential spin-off would affect overall revenue, emphasizing that the company does not want to go forward. But he highlighted Comcast’s “very strong hand.”
“I think the idea of playing somewhat offensively, when you combine the balance sheet strength that we have, the assets that we have and the management team that we have, there may be some smart things to do and we want to,” he said. Gross.
Analysts previously told TheWrap that a bid for Comcast’s cable network could be an opportunity to create a cumulative vehicle for the struggling linear TV assets of other companies suffering from cord-cutting as consumers turn to streaming.
During the second quarter of 2024, Paramount Global and Warner Bros. Discovery together received $15 billion in write-offs from the value of their cable networks and a weakening linear advertising market in the United States. Meanwhile, Disney recently recorded a $584 million write-off for its linear entertainment networks during the fourth quarter of 2024.
In the third quarter of 2024, Comcast shed 365k pay-TV subscribers for a total of 12.8 million, and video revenue fell 6.2% year-over-year to $6.7 billion.
Total media revenue up 36.5% to $8.23 billion due to higher advertising revenue and national distribution. Excluding the impact of the Olympics, media revenue rose 4.9% to $6.34 billion.
The Paris Olympics and additional Peacock sales drove local advertising revenue growth of 74.9% to $3.35 billion, which was partially offset by lower revenue across the company’s networks. Domestic distribution revenues increased 26.3% to $3.27 billion, primarily reflecting the Paris Olympics broadcast and higher revenues at Peacock. International network revenues increased 5% to US$1.07 billion due to the favorable impact of foreign currency and increased revenues associated with the distribution of sports networks. Other revenue grew 7.2% to $542 million, primarily due to increased content licensing revenue.
Adjusted EBITDA for the Media segment decreased 10% to $650 million, due to higher operating expenses due to increased sports programming costs associated with the Olympics, higher programming costs at Peacock and increased other sports programming costs for national television networks.
Comcast shares, which closed at $42.32 at the end of Tuesday’s trading session, rose 1.65% in after-hours trading following the news.
