Comcast to spin off cable TV networks as ‘streaming won’

Pool of cable subscribers is shrinking as millions cut the cord and rely on streaming services for their entertainment.

Comcast will spin off many of its cable television networks that were once at the heart of the entertainment giant as people increasingly swap out their cable TV subscriptions for streaming platforms.

Those one-time stars of Comcast’s NBCUniversal cable television networks include USA, Oxygen, E!, SYFY and the Golf Channel as well as CNBC and MSNBC. The movie-ticketing platform Fandango and the Rotten Tomatoes movie rating site are also to become part of the new company, Comcast said on Wednesday.

The Peacock streaming service will remain with Comcast as will Bravo, which provides significant content for Peacock. The streaming service was launched in 2020 and after a confusing, glitchy start has taken off recently, boosted in part by its popularity during the 2024 Paris Olympic Games.

Comcast telegraphed the potential shift last month as it released quarterly earnings before confirming on Wednesday that it will spin off assets that generated about $7bn in revenue over the past 12 months ending on September 30. That’s about 5.5 percent of Comcast’s total revenue during that period, it said.

But there is a shrinking pool of cable subscribers as millions of customers cut the cord and rely increasingly on streaming platforms for entertainment.

Cowen & Co analysts in a note said the spin-off may well be a precursor to Comcast combining with another pay TV provider, such as Charter Communications.

Cable television pioneer John Malone earlier this month told investors that Charter should merge with one of its larger media or telecommunications rivals to remain competitive.

The new stand-alone company would similarly be positioned as an acquirer, or a target, sources said.

The tax-free spin-off is expected to take a year to complete.

“The most likely buyers of these cable channels are private equity firms or other media conglomerates,” Emarketer analyst Ross Benes said.

‘Streaming won’

Comcast’s decision comes more than a decade after it secured full control of NBCUniversal in a series of deals with General Electric, transforming the company from a cable operator into a media behemoth when such assets were attractive.

NBCUniversal came under the full control of Comcast more than 10 years ago [File: Richard Drew/AP Photo]

It marks an inflection point for Comcast CEO Brian Roberts, who earned the nickname “the builder” for the series of acquisitions that transformed the cable business his father had founded.

Comcast’s cable networks have declined from their heyday as millions of viewers migrated to internet streaming services like Netflix, YouTube and Amazon Prime Video.

“The pay TV bundle had a great 30-year-plus run,” said Jon Miller, CEO of Integrated Media, which specialises in digital media investments. “Things change. Streaming won. That reality is now setting in.”

Still, Philadelphia-based Comcast’s cable networks reach 70 million US households, making the new company attractive to investors, distributors and potential partners.

“The company will have significant cash flow, a strong balance sheet and the financial flexibility to pursue growth opportunities, both organically and through acquisitions,” Comcast President Mike Cavanagh wrote in a memo to employees seen by the Reuters news agency.

Activate CEO Michael Wolf predicts the pay TV business will stabilise at about 50 million US households and continue to throw off cash.

“This is a smart move,” Wolf said. “It allows Comcast to continue to get value out of these cable networks and focus the rest of the business on other areas which have a lot of growth prospects.”

Mark Lazarus, who currently serves as chairman of NBCUniversal’s media group, will lead the new venture as CEO while Anand Kini, CFO of NBCUniversal, will be the operating chief and finance head of the new company.

Donna Langley will become chairman of NBCUniversal Entertainment & Studios, an expanded role that will give her oversight of all entertainment programming. Matt Strauss will become chairman of NBCUniversal Media Group, where he will continue to oversee the company’s streaming business as well as NBC Sports, ad sales and content distribution.