Mike Cavanagh, president of Comcast Corporation, center, during the Allen & Company Sun Valley Conference in Sun Valley, Idaho, on July 12, 2023.
David A. Grogan | CNBC
Comcast is considering separating or spinning off NBCUniversal's cable networks. If he follows through with the idea, it could lay the groundwork for a reconfiguration of the entire American media landscape.
Comcast's logic is pretty simple. NBCUniversal's cable networks are no longer growing. The company's energy and focus is on promoting Peacock, NBCUniversal's growing but still money-losing online streaming service. Trimming the cable portfolio could appease Comcast investors by removing declining assets from the balance sheet.
Comcast shares gained more than 3% on Thursday following the release of third-quarter earnings and the company's conference call.
“We are now exploring whether creating a new, well-capitalized company, owned by our shareholders and comprised of our strong portfolio of cable networks, would position us to take advantage of opportunities in the changing media landscape and create value for our shareholders,” Comcast president Mike Cavanagh said during the call. “We're not ready to talk about any specific details yet, but we'll get back to you when we reach firm conclusions.”
Although executives stressed that exploration is in the early stages, it could be a prelude to broader industry consolidation. NBCUniversal's cable networks, which include Bravo, E!, Syfy, Oxygen True Crime and USA Network, as well as news networks MSNBC and CNBC, could merge with another media company or could be a catalyst for a buildup or consolidation of cable networks. channels in several different companies.
The idea of a summary is not new. It's something media mogul John Malone discussed back in 2016, when Lionsgate acquired premium network Starz.
“Lionsgate could buy Starz and potentially other free radicals in the industry,” Malone said at the time, referring to cable network groups that are not owned by large media conglomerates like AMC Networks, controlled by the Dolan family, or A&E Networks. , which is co-owned by Hearst and Disney.
That vision never materialized, in part because the media world's attention shifted from traditional pay TV to streaming, which devalued cable networks. Earlier this year, Warner Bros. Discovery reported a non-cash goodwill impairment charge of $9.1 billion, triggered by the revaluation of the book value of its television networks segment.
Still, the loss of value of cable networks has created a new opportunity for consolidation, if companies like Comcast, Warner Bros. Discovery and disney They decide they want to get rid of declining cable assets and focus on streaming.
So far, media companies have chosen to maintain their cable networks, which still generate billions in profits even as millions of Americans cut the cord each year.
Comcast can establish a pattern if it moves forward with a turnaround and sees an increase in its overall valuation.
Ironically, Starz could once again play a role in a media shakeup. The small media company wants to be the vehicle for a cable network consolidation, CNBC reported in 2022. Starz will separate from Lionsgate in late 2024.
There is great uncertainty about whether a company that is made up solely of cable networks has a viable path forward as a publicly traded entity. Stock investors typically aren't fans of declining assets, even if they have a lot of cash.
But even if Starz doesn't achieve its vision of an amassed cable network, a private equity firm may have interest in tapping a group of cable networks for cash. Apollo Global ManagementFor its part, it had late interest in acquiring Paramount Global and has made several media-related investments in recent years, including the purchase of Yahoo.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
