Movies

Comcast considers spinning off cable channels like MSNBC. But analysts have doubts

BBG News

As a seasoned critic with decades of observing the ever-evolving landscape of media and entertainment, I must admit that Comcast Corp.’s consideration to spin off its cable networks into a separate company strikes me as both a bold move and a necessary one. The linear television business is indeed undergoing seismic shifts, and it’s only prudent for giants like Comcast to adapt and innovate in response.

Comcast Corporation, the parent company of NBCUniversal, might be planning to split off its cable channels into a distinct entity, as the media conglomerate navigates significant transformations happening within the traditional broadcast television sector.

By separating the cable networks into a separate entity, entirely owned by Comcast stockholders, President Michael Cavanagh believes it will enable them to “seize opportunities within the evolving media sector and generate benefits for our shareholders,” as he explained on the company’s third fiscal quarter conference call with analysts.

Similar to numerous counterparts within the media industry, we’re encountering shifts in our video-related businesses and have been carefully examining the optimal strategies for these resources. However, at this point, we’re not prepared to disclose specifics, but rest assured that we will share further details with investors once we reach solid conclusions.

NBCUniversal’s cable networks include USA Network, Bravo, MSNBC and Syfy.

As a film enthusiast, I myself am pondering potential collaborations for my streaming service, which, since its debut, has been hemorrhaging millions in losses.

The consideration comes as the cable television business is undergoing upheaval. As customers have turned to streaming services, they are continuing to cut the cord, leading to major concerns for legacy TV businesses. Paramount Global and Warner Bros. Discovery recently wrote down the value of their cable channel segments by billions of dollars.

But analysts were skeptical of such a move by Comcast to unload its cable channel assets.

These networks can keep transmissions and raise their subscription fees with distributors due to being packaged together with the broadcast network NBC. Moreover, a significant portion of the content from these cable networks is also streamed on NBCUniversal’s platform, Peacock, as mentioned by Ric Prentiss, managing director at Raymond James, in a note to clients on Thursday.

He suggested that separating these underperforming assets might seem beneficial, but we believe there are intricacies and potential conflicts in such a move. These assets might appeal to a private equity investor, but we’re doubtful that a standalone publicly traded stock would thrive on its own.

Analyst Rich Greenfield from LightShed Ventures emphasized the high level of intricacy involved in the possible agreement, using direct language.

He wrote to his clients that it seems like excessive worry over nothing, but when one perceives a grim future without any avenues for progression, they raise concerns and consider various strategic solutions.

Originally, Bob Iger, CEO of The Walt Disney Company, proposed separating the television divisions of the media giant based in Burbank, California. However, he later retracted his statements on this topic.

Due to mostly favorable earnings results, which were partially fueled by the Summer Olympics, Comcast’s share price increased by 3% to $43.67. However, the company’s stocks have remained unchanged throughout this year so far.

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2024-11-01 01:01

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