Comcast has formally unveiled plans to spin out most of its linear cable networks (except Bravo) to shareholders in a separate company, a move that President Mike Cavanagh said puts all of NBCUniversal “on a new growth trajectory.”
Deadline reported many of the details yesterday including leadership of the new entity (initially called SpinCo) by NBCUniversal Media Group’s Mark Lazarus and CFO Anand Kini, and expanded oversight for Donna Langley, who will become chairman of NBCUniversal Entertainment and Studios.
Together they will lead the development of an independent strategy, while also establishing SpinCo as a potential partner and acquirer of other complementary media businesses, the company said.
“As a standalone company with these outstanding assets, we will be better positioned to serve our audiences and drive shareholder returns in this incredibly dynamic media environment across news, sports and entertainment,” said Lazarus.
“We see a real opportunity to invest and build additional scale and I’m excited about the growth opportunities this transition will unlock. Our financial strength will also provide capacity for an attractive capital return policy while allowing for investment in the growth of these businesses.”
Comcast teased a possible split in late October with Cavanagh calling it “the best path forward for these assets” as the media business transitions from linear to streaming. Cable assets to be carved off include cable channels MSNBC, CNBC, E!, Syfy, Golf Channel, Oxygen and USA as well as digital assets like Fandango, Rotten Tomatoes, GolfNow and Sports Engine.
Bravo, as well as NBC and streamer Peacock, will remain inside Comcast.
The decision comes as streaming has upended entertainment, eroding the reach of linear television. Paramount Global and Warner Bros. Discovery took massive, multi-billion dollar hits this summer to write down the value of their cable business.
Balancing a business that’s declining but still throws off lots of cash with the new streaming imperative has been the top consideration for media companies.
Comcast believes that clustering them outside its core broadband, theme park and studio business is the best way to give the media giant some optionality. It’s one of first dramatic moves by a major media company short of a merger like Paramount’s sale to Skydance.
Now announced, the spin-off is a complicated process that should be complete by the end of 2025. Customary closing conditions include final approval from the Comcast board, satisfactory completion of SpinCo financing, receipt of tax opinions, and any regulatory approvals.
“When you look at our assets, talented management team and balance sheet strength, we are able to set these businesses up for future growth,” Comcast chair and CEO Brian Roberts. “With significant financial resources from day one, SpinCo will be ideally positioned for success and highly attractive to investors, content creators, distributors and potential partners.”
Over the last twelve months ended September 30, Comcast said, SpinCo generated approximately $7 billion in revenue. SpinCo will have the same dual-class share structure as Comcast.
Comcast is among the best situated financially among its media peers. It said spin transaction is expected to be accretive to revenue growth at Comcast and approximately neutral to Comcast’s leverage position. And it doesn’t anticipate any change to its credit profile or ratings as a result.
Opportunities it ticked off for the new SpinCo include: a dedicated management team with deep sector expertise that can tailor decisions and allocate capital based on the needs of the business; a well capitalized balance sheet with strong credit metrics; capacity for an attractive capital return policy to drive shareholder value; increased operational focus; and a dedicated board of directors.
While SpinCo will operate as an independent business, it will enter into a transition services agreement with NBCUniversal “to allow SpinCo to operate seamlessly from day one.”
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