Comcast mulls cable networks spin-off, seeks Peacock streaming partnerships
US media giant Comcast is considering spinning off its cable networks portfolio, which includes Bravo, USA Network and Syfy.
Mike Cavanagh
The spin-off would see its cablenets move into a separate company, while broadcast net NBC and streamer Peacock would remain within the main Comcast business, the company said on Thursday.
During Comcast’s third-quarter earnings call, president Mike Cavanagh told investors the company was “experiencing the effects of the transition in our video businesses and [has] been studying the best path forward for these assets.”
“We are now exploring whether creating a new, well-capitalised company owned by our shareholders and comprising our strong portfolio of cable networks would position them to take advantage of opportunities in the changing media landscape and create value for our shareholders,” he said.
He added that Comcast was “not ready” to discuss the potential move in detail yet but would provide updates if it reaches “firm conclusions.”
In addition to Bravo, USA Network and Syfy, Comcast also owns cablenets such as E!, Universal Kids, MSNBC and CNBC.
Comcast is not alone among its legacy media peers in exploring ways to spin off its cable assets into a new company. Both Warner Bros Discovery and Disney have talked about such a move, although nothing has come to fruition. At the same time, Paramount Global, which is in the middle of a sale to Skydance, has been in discussions to sell cable assets including BET Networks.
For the most part, the US cable business is still profitable, but those profits are in a state of accelerating decline as audiences migrate to other forms of video. Many of the legacy media companies are also arriving at an inflection point where their streaming services are on the verge of becoming consistently profitable while their cable assets are in decline.
Cavanagh said Comcast was open-minded about how to approach the future of its cable business. It plans to “commence a study” on what a cable spin-off might look like, but it will not arrive at any conclusions prematurely, he said.
The exec added that Comcast, which owns US streamer Peacock, was interested in streaming partnerships. “As you know, we chose not to participate in the M&A process around Paramount in the earlier part of this year, but we would consider partnerships in streaming, despite their complexities,” he said.
The major US legacy studios have become increasingly open to bundling as they look to reduce churn following years of heavy losses that have bruised their balance sheets. However, to date, none of them have struck a formal streaming partnership or joint venture, although several appear to be mulling the possibility.
In the third quarter, Peacock added around three million paid subscribers to reach 36 million overall and posted a loss of US$436m. That loss was compared with US$565m a year ago and US$348m in the second quarter.
In its media segment, revenue climbed 36.5% to US$8.23bn, helped by a 74.9% increase in domestic ad revenue driven by the Paris Olympics, which was carried on NBC and Peacock. However, adjusted earnings were down 10% to US$650m due to increased sports programming costs associated with the event, higher programming costs at Peacock and an increase in other sports costs for its domestic TV networks.
In Comcast’s studios segment, revenue was up 10.3% to US$2.83bn, with adjusted earnings up 9% to US$486m.
