Comcast to spin off cable TV networks and drive streaming growth

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Comcast is set to spin off its cable television networks, including news channels CNBC and MSNBC, in a move designed to unchain its faster-growing studio and theme parks from the accelerating decline of traditional TV.

Comcast’s cable TV networks, which also include E!, Syfy, Oxygen and USA Network, have suffered as “cord-cutting” consumers favour streaming services. These channels, and websites Fandango and Rotten Tomatoes, would be spun into a new publicly traded company that made about $7bn in annual revenue, Comcast announced on Wednesday.

The company’s other entertainment businesses represent a portfolio that includes Universal Studios and theme parks along with the NBC broadcast network and the Peacock streaming service.

“This transaction positions both ‘SpinCo’ and NBCUniversal to play offence in a changing media landscape,” said Comcast president Mike Cavanagh on Wednesday.

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 had become “anchors around the necks” of media companies, LightShed analyst Rich Greenfield wrote at the time. 

Warner Bros had 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. 

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 will be spun off to shareholders in a tax-free transaction that Comcast expects to complete in “approximately one year”. Mark Lazarus, chair of NBCUniversal Media Group, will run the “SpinCo”.

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.