Spin Out. – NBC New York

The biggest surprise from Comcast’s announcement yesterday that they were spinning off nearly all of their cable channels (including CNBC) wasn’t that we were leaving Comcast. It was that I was leaving NBCUniversal.

After all, NBC was a founding partner of CNBC (which originally stood for “Consumer News and Business Channel”) in 1989. It’s so intertwined with our existence that we’re all still trying to figure out exactly what that separation was in 1989. future. will mean Reporters often travel between networks seamlessly. Our cafeteria was just promoting the new movie “Wicked” from Universal. Heck, our email addresses all end in “nbcuni.com”!

Now, we’re orphaned from the $164 billion Comcast/NBC mothership, which is set to become a separate entity comprised of seven or so cable networks and a handful of digital properties that analysts estimate will be worth between 12 and 16 billion dollars.

But Comcast had to do something. Stocks have basically gone nowhere in five years, except for a brief Covid-induced sugar high, while the S&P 500 has doubled. Unfortunately, the timing of this move may be a little too late to get investors excited. Comcast rose just 1.5% on the news today and is still in the red this year.

“A standalone spin-off … makes little financial sense,” Barclays analysts wrote yesterday, “(and) feels a little ambitious.” Asked whether the new entity would be left with sufficient resources — after losing, for example, joint bargaining power with NBC against the carriers — they added, “it’s hard to see this as anything other than potentially the first step of larger ones.” initiatives at a time.”

The problem is that other entities of a similar size and position – Paramount and Warner Brothers Discovery – have a lot of debt. This would seem to make their acquisition less attractive to our new “SpinCo”. Disney, meanwhile, has just reiterated that it is not divestment of ABC, FX or its other networks. If SpinCo can’t or won’t be part of the major industry consolidation, then it might end up in the hands of private equityas our Alex Sherman suggested.

The bigger move for Comcast here, many analysts speculate, could be an effort to avoid a regulatory rollback if it pursues a merger with Charter that could create the first national broadband player in a deregulatory Trump administration. Not only does the company need to boost performance, but it needs to do so as competition from fixed wireless and even Starlink is expected to increase over the next decade.

And buying NBCUniversal from General Electric at a discount was actually a great move for Comcast, which has performed pretty well for most of the last decade. So maybe they have some smart ideas for “SpinCo” up their sleeve now.

See you at 1 pm..

Kelly

Click HERE to sign up for this newsletter in one easy step.

To listen to this as a podcast, subscribe to “The Exchange” and choose “From the office of…”

Twitter: @KellyCNBC

Instagram: @realkellyevans