Comcast to spin off some cable TV networks as streaming dominates
· CNA · Join:Comcast plans to divest the bulk of its once-coveted NBCUniversal cable TV assets, including MSNBC and CNBC, as the rising dominance of streaming platforms relegates legacy media businesses to the cutting room floor.
Shares of the company rose about 2 per cent in premarket trading, after Comcast said on Wednesday it would separate its entertainment and news channels including USA, Oxygen, E!, Syfy and Golf Channel. It will retain some NBC entertainment, sports and news properties, along with the Peacock streaming service, its theme parks as well as film and television studios.
Higher costs to produce content, changing preferences of younger audiences and an exodus to streaming services such as Netflix have pressured profitability for traditional television and cable networks.
"The most likely buyers of these cable channels are private equity firms or other media conglomerates," said Emarketer senior analyst Ross Benes.
"PE would have an easier time hiding financial losses from a purchase than public companies would. PE buyers would cut costs and wrangle out what value is left of the networks, attempting to squeeze out quick profits."
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 to a media behemoth when such assets were attractive.
In yet another deal underscoring the changing landscape of the media industry, Comedy Central and Nickelodeon owner Paramount Global agreed to merge with streaming-era upstart Skydance Media earlier this year.
Warner Bros Discovery in August wrote down the value of its TV assets by $9.1 billion due to the uncertainty of fees from cable and satellite distributors and sports rights renewals.
A day later, Paramount wrote down the value of its cable networks by nearly $6 billion. Walt Disney also evaluated shedding its cable networks earlier this year, but ultimately rejected the idea.
Mark Lazarus, who currently serves as the 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.
The tax-free spin-off is expected to take a year to complete. The assets being carved off generated about $7 billion in revenue over the last 12 months.
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