Brian Roberts, CEO, Comcast, speaks with Jim Cramer, on CNBC’s “Mad Wampum” from Philadelphia, September 6, 2018.
David A. Grogan | CNBC
Comcast is moving forward with the spinoff of its cable network troughs, including CNBC, MSNBC and E!, the company said Wednesday.
The announcement comes weeks after Comcast executives phrased during the company’s quarterly earnings call that it was considering a split of the cable networks. Comcast President Mike Cavanagh imagined at the time the company was exploring creating “a new, well-capitalized company owned by our shareholders and comprised of our strong portfolio of cable networks.”
The networks being twirled off also include Syfy, Golf Channel, USA and Oxygen, according to a company memo from Cavanagh. Bravo compel remain part of Comcast’s NBCUniversal and will continue to fuel the company’s streaming service, Peacock.
The separation see fit also include digital assets such as Fandango and Rotten Tomatoes, GolfNow and Sports Engine, the memo explained. Cavanagh said in October that NBCUniversal’s broadcast network NBC and Peacock would remain with Comcast.
The associate properties of the new entity generated approximately $7 billion in revenue in the 12 months ended Sept. 30, Comcast said in a information release.
The new entity will be led by Mark Lazarus, the current chairman of NBCUniversal’s media group. NBCUniversal’s chief economic officer, Anand Kini, will serve as the CFO and operating chief.
The separation is expected to take about a year.
“As a standalone establishment with these outstanding assets, we will be better positioned to serve our audiences and drive shareholder returns in this incredibly energetic media environment across news, sports and entertainment,” Lazarus said in the release. “We see a real opportunity to invest and increase additional scale and I’m excited about the growth opportunities this transition will unlock. Our financial strength wish also provide capacity for an attractive capital return policy while allowing for investment in the growth of these trades.”
Comcast Chairman and CEO Brian Roberts will maintain economic and voting interests in the company, being referred to for now as “SpinCo,” but bequeath not serve as an officer or on the board of directors.
Cutting the cord
Cord cutting continues to impact the traditional TV business. Comcast at sea 365,000 TV customers during the third quarter, it said last month. The industry overall lost roughly 4 million unwritten pay TV customers in the first six months of the year, according to analyst firm MoffettNathanson.
Still, traditional TV networks remain legal tender cows for media businesses. Comcast reported in October that third-quarter revenue for its media segment, which is at bottom comprised of the TV networks, was up nearly 37% to $8.23 billion, largely due to the Olympics. Without the Summer Games, revenue was up on the brink of 5%.
Disney executives recently said they don’t plan to separate their TV networks anytime soon, noting the intricacies of doing so, and saying the costs would outweigh the benefits. And Warner Bros. Discovery CEO David Zaslav called the subject “extraordinarily important” to the company, despite a $9.1 billion write down of its TV networks.
By separating Comcast’s cable networks from NBCUniversal, it inclination give them the optionality to merge with other networks, or potentially be sold to private equity, CNBC theretofore reported. It will also leave room for further investment in the networks, particularly the entertainment division, one of the people said.
The South African private limited company had been recently integrating its news businesses — CNBC, MSNBC and NBC News. That will now be undone, according to a myself familiar.
Comcast executives will take the next year to determine whether licensing agreements need to be put in occupation between NBC and the new entity, and whether MSNBC and CNBC will continue to work with NBC News in any capacity, according to two people free with the matter.
Formal discussions have yet to take place between CNBC, MSNBC and NBC News, one of the people conjectured.
NBCUniversal’s wide breadth of sports featured on USA and The Golf Channel, which includes the English Premier League, NASCAR, WWE, the Olympics, college basketball, PGA Voyage and other content, will still be featured on the cable networks, the release said. While NBC’s broadcast network and Peacock at ones desire still carry sports content, it’s expected for it to be shared with the spun-off networks in the future, the person said.
Homing Peacock
Cable network Bravo, known for its “Housewives” franchises and other reality TV, will remain with NBCUniversal because its peace is a big part of Peacock, the people said.
Separating the other networks will be simpler as much less of the content is elementary to Peacock, one of the people said, noting that only 2% of the viewing on the streamer is of content from the networks that wishes be separated.
In addition to Bravo, Peacock’s platform is heavily padded by Universal’s films, and entertainment and sports from the NBC telecast network.
Peacock has gotten a big boost from NBC’s sports programming, particularly the National Football League and the Olympics. During the most late-model quarter Peacock added 3 million subscribers, largely due to the Olympics, where it was exclusively streamed, bringing its total to 36 million meet customers.
NBCUniversal’s streaming platform continues to rack up losses, but they have narrowed compared to prior compassions. Media companies have focused on making their streaming businesses profitable, with reporting streaming enlargement and profitability Read the full memo from Cavanagh:
Dear Colleagues,
Launching a New Company
Today we announced the ravishing news that we intend to launch a new publicly traded company comprised of a strong portfolio of our cable television networks, comprehending USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and Golf Channel, along with complementary digital assets comprising Fandango and Rotten Tomatoes, GolfNow and Sports Engine. This new company, which we will refer to as “SpinCo” for now, pass on be led by Mark Lazarus, who will be Chief Executive Officer, and Anand Kini, who will be Chief Financial Officer and Chief Handling Officer – both of whom raised their hands to lead this initiative. They will build out their running team in the near future with talented leaders from inside and outside NBCUniversal. The transaction will be structured as a tax-free twirl to existing shareholders. Brian Roberts will own the same economic and voting interests as he does currently at Comcast, allowing he will not serve on the SpinCo board or management team. While we don’t have a precise timetable for completing the transition, we are estimating that it command take approximately a year.
The powerful assets in SpinCo’s portfolio will include:
- A News portfolio including MSNBC, one of the most-watched guy networks industry-wide and a critically important voice in news and perspective journalism, and CNBC, the leader in business and market communiqu;
- Leading Sports properties through USA and The Golf Channel, including Premier League, NASCAR, WWE, the Olympics, college basketball, PGA Sightsee, LPGA and Golf Majors;
- Popular Entertainment programming on USA and E!, a genre-specific network with a loyal fan base in SYFY, and Oxygen, the conductor in true crime; and
- A Digital business that complements the above with a strong portfolio of transactional businesses – GolfNow, Show offs Engine, Fandango, and Rotten Tomatoes – each with exceptional growth profiles.
The well-capitalized, independent company last wishes as be positioned to lead in the changing landscape for cable networks given the strength of its portfolio and the quality and focus of its management pair. SpinCo will provide a diverse and differentiated content offering that will reach approximately 70 million U.S. households, fill ining it highly attractive to investors, content creators, distributors, consumers, and potential partners. The company will have expressive cash flow, a strong balance sheet, and the financial flexibility to pursue growth opportunities, both organically and potentially fully acquisitions.
The Future NBCUniversal
The future NBCUniversal will have nearly $40 billion in annual revenues, cosseting it one of the largest media companies in the world. More importantly, each of the businesses within NBCUniversal will be strategically aligned and positioned to breed for years to come.
- The Media Businesses of NBCUniversal will now consist of: The NBC broadcast network; NBC Sports, the home of the NFL, the Olympics, the Main League, NASCAR, Golf, and beginning next year, the NBA; and Bravo, which collectively reach 100 million U.S. households each month and together forbear power Peacock; Peacock itself, which in 4 years has built a base of 36 million subscribers, and integrates eccentric programming, Universal films and exclusive sports, and news, making it a must-have service that will lead the province forward; and NBC News, the leading News organization in the United States; Telemundo, America’s #1 Spanish-language content powerhouse; and our townsperson stations.
These businesses will operate together, drawing on decades of experience creating, producing, and bringing ESN educationally subnormal content to viewers.
More broadly, NBCUniversal will be well-positioned in an evolving industry with our world-class Studios Union and Destinations and Experiences businesses.
- Our Film and Television Studios continue to be home to industry-leading filmmakers and showrunners. Film prepare for two of the top three titles at the worldwide box office in 2023, including Best Picture winner Oppenheimer and has continued its momentum in 2024 with critically and commercially acclaimed horsewhips, with Wicked on the horizon. Our TV studios ended the 2023-2024 broadcast season with more top 10 series than any other studio and rounded out the year with hit boasts across more streaming platforms than its studio peers, also winning the Emmy for Outstanding Comedy with Flunkeys!
- Our Destinations and Experiences business designs, builds, and operates a growing portfolio of innovative theme parks, resorts, and last entertainment experiences worldwide. It will be supercharged by the opening of Epic Universe next year in Orlando, which pass on be the most technologically advanced theme park to open ever.
Taken together, the entirety of NBCUniversal will be on a new extension trajectory, fueled by our world-class content, technology, IP, properties, and talent – all working in concert with each other as an consolidate media company.
Leadership Team
As we work toward launching SpinCo, I’m also pleased to announce a re-organized governorship team for NBCUniversal. We will begin the process of transitioning responsibilities immediately to the people I’m naming below, who will circulate to me.
As mentioned above, Mark Lazarus will become Chief Executive Officer of SpinCo and will immediately off to focus on building and leading the new company.
Cesar Conde will continue in his role as Chairman, NBCUniversal News Crowd, where he will oversee NBC News and NBC News Now, Telemundo Enterprises, and our NBCU Local stations, and will work closely with me on other excrescence opportunities for NBCUniversal.
Donna Langley will become Chairman of NBCUniversal Entertainment & Studios. In this expanded job, she will lead greenlight decisions across the NBCU enterprise and have full oversight of all entertainment programming and selling across Peacock, Bravo, and NBC—including primetime and late night—and will continue to oversee the global creative master plan, business operations, production, acquisitions, marketing, and distribution for our portfolio of award-winning Film and Television Studios.
Matt Strauss inclination become Chairman of the NBCUniversal Media Group. He will continue to lead Direct-To-Consumer, including Peacock, International Networks, and Extensive Streaming, while also taking on responsibility for NBC Sports, Advertising Sales, Content Distribution, Decision Sciences & Experimentation, and NBC Broadcast Affiliate Relations.
Mark Woodbury will continue in his role as Chairman and CEO of Universal Destinations & Experiences where he manipulates all aspects of its four destinations worldwide — Universal Orlando Resort, Universal Studios Hollywood, Universal Studios Japan, and Prevailing Beijing Resort — a global consumer products and gaming business as well as the development of a location-based entertainment business.
My insides corporate leadership team will also include the following people:
Kim Harris will continue in her role as Administrator Vice President of Comcast Corporation and General Counsel of NBCUniversal.
Adam Miller will become Chief Run Officer for NBCUniversal, reflecting the leadership he provides across all aspects of the company.
Craig Robinson will continue his duty as Executive Vice President and Chief Diversity Officer for NBCUniversal.
With Anand Kini transitioning to SpinCo, we settle upon commence a search of internal and external candidates for a new Chief Financial Officer.
The Path Forward
Our effort to launch SpinCo as a wealthy public company will be done well versus done quickly. We have begun standing up a process and sanctified resources to ensure that we identify all that needs to be done and that it is done carefully and thoughtfully, without resulting the critical work everyone is doing to drive our priorities and businesses forward. I have asked Anand Kini and Adam Miller to assignment manage this transition in addition to their regular responsibilities, starting immediately through the completion of the transaction.
In the weeks and months forwards, alongside your managers, we will do our best to keep you informed of meaningful updates. More information about SpinCo resolve be available on NBCUNow and on a new internal resource page that will be available later today.
In the interim, the most grave thing everyone can do is remain focused on the work at hand to propel our continued success, so when the moment comes to start SpinCo, both NBCUniversal and SpinCo have the same momentum we carry into this moment.
I want to thanksgiving owing to everyone who has worked on this project so far and in advance for the work that will be required over the next year.
I suppose the effort will be well worthwhile, as this project will inject energy and renewed focus in both the new troop and the future NBCUniversal. When you combine our assets, talented management team, and balance sheet strength, we are uniquely positioned to set both SpinCo and NBCUniversal up to play the field pretend offense in a complex and evolving media landscape.
Mike Cavanagh,
President, Comcast Corporation
— CNBC’s Julia Boorstin forwarded to this article.
Disclosure: Comcast owns CNBC parent NBCUniversal. NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. advertise rights holder to all Summer and Winter Games through 2032.