Comcast is spinning off its NBCUniversal entertainment and media assets into a separate publicly traded company, the media giant announced Monday.
The plan will put broadcast networks NBC and Telemundo, NBC News, cable network Bravo and streaming service Peacock, the Universal film studios and British TV service Sky into a new free-standing company. The Philadelphia-based Comcast would remain in its core business of distributing pay TV channels and wireless services.
The spinoff would be the second such move by Comcast, which last year completed the spinoff of its cable assets such as CNBC, USA Network and Golf Channel into a new entity called Versant.
“The proposed separation reflects Comcast’s track record of positioning its businesses to compete and win in rapidly changing markets. As technological innovation, consumer behavior and competitive dynamics continue to reshape both media and communications, Comcast’s Board and management team believe each company will be better positioned to pursue its own strategic priorities, invest for growth and create long-term shareholder value as independent entities,” the company said in a statement.
A free-standing NBCUniversal would likely be seen as an acquisition target, as media companies have been consolidating in an effort to get more content and mass distribution for their streaming services. Paramount is on track to close its $111 billion deal to acquire Warner Bros. Discovery, which will combine such media assets as HBO Max, CBS, CNN, Paramount Pictures and Warner Bros. Pictures
Comcast would be a free-standing business well-positioned to combine with another cable and internet provider.
Comcast is expected to complete the spinoff next year and will retain an 19% stake in the new entity.
Comcast acquired NBCUninversal in 2011. The deal combined the largest distributor of TV channels with a provider of top-rated TV channels and a movie studio. But consumers have gravitated to streaming platforms which have led consumers to cancel their cable packages. Traditional TV viewing has been in a steady decline over the last decade.
NBCUniversal has invested heavily in its streaming service Peacock but has been unable to reach the scale necessary for profitability. Comcast stock price has struggled as a result.
Brian L. Roberts, chairman and chief executive of Comcast will be involved in the leadership of Comcast and NBCUniversal, working in partnership with the chief executives of both companies. Mike Cavanagh will remain as the chief executive of NBCUniversal and Comcast’s former Chief Financial Officer Michael Angelakis will run Comcast after the spinoff.
On a call with investors, Roberts said the spinoff is the best past forward for facing the competitive challenges.
“We asked ourselves three basic questions,” Roberts said. “One, can these businesses stand alone and have the heft to stand alone in separate companies? Two, do they have clear, viable capital allocation path to invest? And three is now the right time. And the answer we came back with was yes to all counts.”
Comcast shares traded higher on the news, up nearly 8% in early trading at around $25 a share. The stock is well below its 52-week high of $34.34.
The executives played down the notion that the two companies are being set up for another deal.
“Absolutely not,” Roberts said when asked the question on the analysts call. “This is the right move to put each company in the strongest position to create value, fully monetize its assets, and aggressively pursue its own organic growth strategies,” Roberts said.
Cavanaugh sounded more like a buyer than a seller. “Our plan for NBCUniversal and Sky is to build and invest for growth,” he said. “We have the freedom now to explore adjacent businesses where we have the right to play, and that’s thanks to the stability of our company and management team.”
