Comcast to spin off cable networks that were once entertainment giant’s star performers, ET BrandEquity

Comcast (file image)

Comcast is transforming itself into a new company, many of the cable networks that were once at the heart of the entertainment giant, as consumers increasingly trade their cable TV subscriptions for streaming platforms.

These one-time stars for Comcast’s NBCUniversal cable television networks include USA, Oxygen, E!, SYFY and the Golf Channel, as well as CNBC and MSNBC. Movie ticketing platform Fandango and movie rating site Rotten Tomatoes will also become part of the new company.

The Peacock streaming service will remain with Comcast, as will Bravo, which provides significant content for the Peacock streaming service, and other assets such as NBCUniversal’s studios and theme parks.

Comcast telegraphed the change last month before confirming Wednesday that it would divest assets that generated about $7 billion in revenue in the 12 months ended Sept. 30. That represents about 5.5 percent of Comcast’s total revenue during that period, according to the company.

How exactly this split will affect customers is not yet clear. Experts say it’s too early to tell, given that Comcast aims to complete the transition within the next year.

Some analysts speculate that the breakaway networks could have more freedom to bring their content elsewhere. That could mean you’ll have more options for finding and organizing what you want to watch and where — or headaches from juggling several different subscriptions in an already fractured media landscape.

Wednesday’s announcement comes as more people are “cutting the cord” on cable, with millions canceling service subscriptions each year — and signing up for streaming platforms instead.

Paul Verna, principal analyst and vice president of content for market research company eMarketer, said Comcast’s decision to pull back from most of its cable TV channels is a reflection of that trend.

“The writing is on the wall that the cable TV business is a shrinking business,” Verna said. “That’s why Comcast did what it did today.”

Mike Proulx, vice president and director of research at Forrester, added that the spin-off marks “simply a reconciliation of assets that diminishes the company’s inevitable future across all streams.”

Comcast expects the new company, which it named “SpinCo” on Wednesday, will have the financial flexibility to be “a potential partner and acquirer of other complementary media businesses.” And Mark Lazarus, the current president of NBCUniversal Media Group, who will serve as CEO of the new entity, said Wednesday that the independent company “will be better positioned to serve our audience and generate returns for shareholders.”

Like other cable companies, Comcast in recent years has shifted its business focus from traditional cable to streaming and other sources of revenue, such as its movie studio, theme parks, and wireless and home Internet services .

Despite a slightly confusing, bumpy start, Peacock has been one of the company’s biggest success stories, with recent incentives gained in part by the streaming platform’s popularity during the 2024 Paris Olympics. In its most recent quarter , Comcast reported that paid Peacock subscribers grew by 3 million, or 29 percent, to 36 million subscribers. Peacock’s revenue rose 82% to $1.5 billion during the period.

Ditching “money-losing assets” to focus instead on these types of profitable businesses is clearly beneficial for Comcast, Verna said — but the future of a new company that primarily hosts cable networks is less promising. He said it was hard for him “to imagine that this company will remain independent for a long time,” predicting future consolidation of networks or private equity acquisitions.

Howard Gutman, head of private equity strategy and coverage for MorganFranklin Consulting, also expects consolidation to be in play. He noted that the spin-off could attract larger streaming services looking for more content, for example, to buy such assets.

That could mean Golf Channel watchers, for example, find their content on what were once rival platforms. But the spun off assets could also find more power to focus on their specific priorities under the umbrella of a smaller company, Gutman added. This would potentially open the door for networks like CNBC to further monetize their own content or extend their brand.

“I think it will open up opportunities,” he said, adding that customers will also have more options to organize subscriptions based on what interests them most.

Verna is less optimistic. He pointed to a history of changes in the media landscape that have repeatedly been tough on consumers.

People already have trouble figuring out where to watch or stream something they’re looking for, Verna said, and licensing or distribution deals could make that worse. And paying for more and more services adds up, especially as platforms have increased their prices over time.

“It’s too early to know what impact (the Comcast spin-offs) will have … But I wouldn’t hold my breath (if there’s) a net benefit to consumers,” Verna said. “Consumers are the ones who should be driving these trends, and to some extent they are. But they also tend to get the short end of the stick every time.”

The spin-off is expected to be completed in about a year, the entertainment giant said on Wednesday, pending financing and approval from its board of directors and government regulators.

Beyond Lazarus’ appointment as CEO of the new company, Anand Kini, NBCUniversal’s current chief financial officer, will take on the same title with the new company as well as the role of chief operating officer.

Shares of Philadelphia-based Comcast ended up 1.6% on Wednesday.

Comcast reported more than $32 billion in revenue and a profit of $1.12 per share in its most recent quarter, boosted by the summer success of “Despicable Me 4,” which grossed more than $1 billion worldwide.