• by Wayne Friedman , November 20, 2024

Moving quickly after a short evaluation period, Comcast Corp. is now going ahead with a dramatic industry-shaking move to spin off its financially growth-challenged NBCUniversal cable TV networks into a new company, according to reports.

Comcast will spin off virtually all its cable TV entertainment channels and news networks, MSNBC and CNBC, while keeping one lone cable entertainment network -- Bravo -- to form a new, as-yet unnamed company.

Also remaining at Comcast Corp. will be most sports businesses, the NBC Television Network and its owned broadcast TV stations, Universal Studios, production entities, theme parks and streamer Peacock. The Wall Street Journal first broke the story.

NBCU cable TV entertainment networks to be moved to the new company include USA Network, Syfy, E!, Oxygen, and the Golf Channel.

Comcast Corp. representatives did not return messages by press time.

Reports say Comcast on Wednesday will announce a decision to move those networks to a newly created publicly traded company.

Less than three weeks ago, Comcast executives said the company was evaluating the possibility of spinning its cable networks into a separate company.

Laurent Yoon, media analyst of Bernstein Research, says, “we do not anticipate the SpinCo [new company] to be accretive to the consolidated valuation.” That means no appreciable growth “at least not a material one, in the foreseeable future.”

He estimates that the $7 billion in estimated revenue for the new company would roughly generate $3 billion in cash flow (EBITDA) - earnings before interest, taxes, depreciation and amortization.

Yoon points to significant and steady declines among virtually all cable TV networks due to continued double-digit-percentage cord-cutting declines.

“We won’t debate here what would be an 'appropriate' valuation, but what would you put on an asset in perpetual decline?” he writes. “The move would’ve been value accretive a few years ago when both cable and media multiples were significantly higher, but better late than never.”

Brian Wieser, media analyst of the Substack publication Madison and Wall, estimates that all NBCU cable networks generate $3.2 billion a year in advertising revenue.

Without Bravo, Wieser says, advertising revenue for the new company and its cable networks would be “around $2.5 billion.... presumably Bravo represented a significant share of revenue.”

Even with the selloff, Wieser says challenges will continue for Comcast, as its consumer reach for advertisers will decline. “In the future, scale will matter even more as marketers will increasingly prioritize the broadest reaching digital platforms over traditional sellers of advertising.”

He adds: “Whether for purposes of selling television advertising or selling ads across multiple platforms to provide maximum scale, unless Comcast has a vision for what it would do with the capital to build up its remaining media business or how it will cause a merger of the business with another company’s cable networks, the transaction would be dis-synergistic.”