Comcast Cuts Cord as Deckchairs Shift Again
Comcast has cut the cord from its own cable networks, the first major studio to sign away its linear TV assets for a future almost entirely based on streaming.
The move has been widely viewed as bold and inevitable but positive by analysts who believe that Comcast will be better placed for growth after the split from the cable networks, which have seen audiences decline.
Analysts also point to the move as setting in motion the last shifting of the deckchairs before the decades-old titan of linear cable TV sinks beneath the streaming waves.
What’s happening?
Comcast is spinning off its NBCUniversal cable television arm to create a new company called SpinCo that will include channels such as MSNBC, CNBC, USA, E!, Syfy, and the Golf Channel.
The networks are still profitable and generated a combined revenue of US$7bn in the year to the end of September reaching 70 million households.
It is retaining the NBC broadcast TV network, its film and television studios, the cable channel Bravo, its theme parks, and Peacock.
In a statement, Comcast CEO Brian Roberts said the spinoff will “set these businesses up for future growth” and will be “highly attractive to investors, content creators, distributors and potential partners.”
Comcast has invested heavily in streaming. Peacock is home to a large library of NBCUniversal content and programming licensed from other studios, and added 3 million subscribers during the third fiscal quarter to 36 million, according to the company’s most recent earnings report. Comcast lost 365,000 cable customers during that period, reported the media conglomerate’s own NBC News.
Even CNBC’s own media reporter, Julia Boorstin, as reported by Forbes, noted “the smaller company can be more acquisitive” in dealmaking with other media companies that are also seeking to offload their cable offerings. The larger Comcast, she suggested, couldn’t afford to do such a roll-up because of the negative impacts on its share price, a concern the smaller company wouldn’t face.
Those other media company assets could come from Paramount, WarnerBros, Fox or Disney which are all writing down or restructuring their traditional cable assets.
Warner Bros. Discovery took a $9-billion write-down on the value of its basic cable portfolio, which includes CNN and TBS. Paramount Global wrote down $6 billion in value for its cable channels, including MTV, Nickelodeon, and Comedy Central.
Disney recorded a $584 million write-down of its entertainment linear networks during its Q4 2024, and another $721m in entertainment and international sports linear assets last year.
Forbes expects these three Hollywood studios to consider whether they too need their own spinoff or perhaps a deal with Comcast’s SpinCo.
What’s more, Disney is planning to launch a standalone SVOD ESPN service next year — a move that could mark a spinoff of the cable giant.
“Comcast is accelerating this pressure [in the cable business] with its success with Peacock, which makes the legacy pay-TV model with multi-channel bundling of cable networks a much more difficult prospect going forward,” noted Raymond James analyst Frank G. Louthan.
What’s the judgment?
Wall Street analysts judged it a welcome development. “Comcast profits are driven by the [broadband] side,” said Emarketer principal analyst Ross Benes. “Dividing the TV networks from the rest of the company will allow Comcast to more clearly show growth in its ISP business.”
Analysts MoffettNathanson recently suggested that media companies need a handful of key assets to thrive in the looming post-Peak TV, post-Streaming Wars era: “We see these assets as: a scaled streaming service (both in the U.S. and globally), a free AVOD platform, top-tier sports rights, a US broadcast network, and film and television studios.”
NBCU has spent billions on the NFL’s Sunday Night Football, the English Premier League, college football, and Telemundo’s Spanish language rights to events like the World Cup. The company recently signed a $2.45 billion per year deal with the NBA to air games on its broadcast network and Peacock for 11 years, beginning with the 2025-2026 season.
Divorcing cable networks from NBC and its sports rights could leave them vulnerable to getting dropped by pay TV distributors, LightShed analyst Rich Greenfield told CNBC. That would likely doom any publicly traded entity of the cable networks portfolio from the start, Greenfield noted.
Nonetheless, with an Olympics in LA 2028, Comcast has good reason to believe that Peacock’s success and popularity during the 2024 Paris Olympics will be replicated and then some.
As for non-sports viewing, AVOD has become the basic cable networks of the streaming age.
“Free AVOD / Fast channel platforms bring reach and inventory that can supplement ad sales across a portfolio,” says MoffettNathanson analyst Robert Fishman. “These platforms now provide an avenue for monetizing older content for companies with large catalogs.”
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