Comcast’s cable networks spinoff raises questions about future of the TV business

Analysis by Brian Stelter, CNN

New York (CNN) — Comcast just jump-started a new season of major change across the television industry. And no one quite knows what will happen next.

On Wednesday morning, the media giant confirmed that it is spinning off most of its cable channels, including MSNBC and CNBC, into a separate publicly traded company. The new company doesn’t have a formal name yet — Comcast is simplycalling it “SpinCo” — a suitable label since employees’ heads are spinning with questions. ­­

And the questions aren’t confined to Comcast. Will other streaming-focused media companies, like The Walt Disney Company or CNN’s parent Warner Bros. Discovery, spin off their cable channels too? How might the cable bundle business model be impacted?

It’s too soon to know. But the spinoff announcement is clearly the beginning of something, not the end, and analysts are predicting a new period of consolidation across the industry.

Mike Cavanagh, Comcast’s president, said in an internal memo Wednesday that the tax-free transaction, which will take about a year to complete, “positions both SpinCo and NBCUniversal to play offense in a changing media landscape.”

Differing views about Comcast offloading its cable channels were evident on one of the affected channels, CNBC, during Wednesday morning’s business news coverage.

Tom Rogers, who was the first president of NBC Cable, said on CNBC’s “Squawk Box” that “I think a couple of these channels as my babies, and my first thought was, ‘The kids are going to be all right.’ I think this is a very good move.”

Up until now, Rogers said, “it’s been pretty clear that these channels have been treated just as cable channels,” without meaningful investment, while Comcast has been prioritizing the Peacock streaming service. In other words, quarterly profits from channels like MSNBC have not been plowed back into the news channel.

“SpinCo,” he said, may open up investment opportunities” as the cable channels “can get the kind of resources they need to expand their franchises.”

“I don’t look at this as a way for Comcast to simply dump problem assets because the cable bundle is continuing to face cord-cutting,” Rogers added. “I look at it much more as an opportunity for some really strong media franchises to be able to broaden themselves.”

One hour later, on the same CNBC program, media analyst Rich Greenfield of Lightshed Partners sang a very different tune.

“This is a very clear, direct statement by Comcast” that “they are exiting the cable network business,” Greenfield said. “This is them saying ‘We don’t want to be in this business. This is no longer a growth business.’ It’s going to be around for a long time, but it is just no longer a growth business.”

Greenfield predicted that the spun-off company’s CEO, Mark Lazarus, will “be on the hunt” for other cable channels – maybe “pieces of Warner Bros. Discovery” or “pieces of Paramount” – to gain more leverage in negotiations with distributors.

Lazarus hinted at this plan in a statement Wednesday morning: He said, “we see a real opportunity to invest and build additional scale and I’m excited about the growth opportunities this transition will unlock.”

Of course, the “SpinCo” may attract buyers as well as sellers. Individual channels may have bidders once the spinoff is complete.

Comcast says the new company will house USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and the Golf Channel, along with some “complementary digital assets,” including Fandango, Rotten Tomatoes, GolfNow and Sports Engine.

Most of NBCUniversal – the NBC broadcast network, the movie studio and theme parks – will remain intact. Those are the parts of the media business that Comcast “likes,” Greenfield said on “Squawk Box.”

“You’re a pain in my tuckus today,” co-anchor Joe Kernen quipped after hearing Greenfield’s bearish view of cable.

But Greenfield is far from the only one. Matt Stoller, research director at the American Economic Liberties Project, said on X that the spinoff is “a prelude to a vast re-consolidation of the industry or a sale of these assets to private equity. Come to think of it, it is weird that CNBC isn’t owned by private equity.”

Comcast signaled that it was exploring this spinoff idea last month, but one of its top rivals, Disney, is taking a different approach. Last week, Disney CFO Hugh Johnston said the “cost” of separating its TV networks from the rest of the company “is probably more than the benefit.” Fox Corp, a much smaller enterprise, has also waved off spinoff talk.

Now, NBCUniversal employees are left with more questions than answers. While some are hopeful about potential investment being unlocked by “SpinCo,” others are anxious about the impending changes.

As one employee put it, speaking on condition of anonymity, “this feels like a jump moment for all of us.”

The-CNN-Wire
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