• Comcast said Thursday it has begun to explore a separation of its cable networks business.
• The separation would not include the broadcast network NBC or streaming platform Peacock.
• The comments came during Comcast's third-quarter earnings call on Thursday.

Comcast is exploring a separation of its cable networks business, President Mike Cavanagh said Thursday.

During the company's third-quarter earnings call with investors, Cavanagh said the company is exploring creating "a new, well-capitalized company owned by our shareholders and comprised of our strong portfolio of cable networks."

The possible separation would not include broadcast network NBC nor streaming service Peacock, he added. NBCUniversal's cable networks portfolio includes Bravo, E!, Syfy, Oxygen True Crime and USA Network, as well as news networks MSNBC and CNBC.

The comments come as millions of customers continue to flee the traditional pay TV bundle in favor of streaming. Comcast has been beefing up its streaming service Peacock, which got a boost during the third quarter when it exclusively aired the Summer Olympics in Paris. Peacock ended the quarter with 36 million subscribers, up 3 million from last quarter.

Shares of Comcast were up more than 3% in midday trading Thursday.

Despite cord cutting, traditional TV networks are still cash cows for media businesses, while streaming has racked up losses. On Thursday, Comcast said third-quarter revenue for the media segment – mainly comprised of NBCUniversal's TV networks – was up nearly 37% to $8.23 billion, largely due to the Olympics. Still, excluding the Summer Games, revenue was up almost 5%.

Cavanagh stressed to investors that the process of studying a separation is at the very early stages, and the potential outcome was still undetermined. Comcast decided to announce it was considering the news so that it could explore the idea without having to worry about leaks or confusion, according to people familiar with the company's thinking. The research will include people inside and outside of NBCUniversal, said the people, who asked not to be named because the discussions are private.

Beyond the primary question of whether to move forward with a spinoff, there's also uncertainty around which networks to include in a possible separation, including whether MSNBC and CNBC should remain with the NBC News Group, said the people. Comcast could also decide to develop a cable network tracking stock rather than a full spin, or the assets could be merged with a peer, the people said.

"I think the questions about how to do it are the reason we're announcing here that we want to study it. There are a lot of questions to which we don't have answers," Cavanagh said Thursday. "And we want to do the work with transparency around it so that as rumors fly and the like, we expect that."

The company lost 365,000 cable TV customers during the third quarter. Cable subscriber losses have been felt across the industry.

Analyst firm MoffettNathanson estimated there were 4 million traditional pay TV subscriber losses in the first six months of the year, calling it "a mindboggling total." That includes 2.37 million losses in the first quarter, considered the worst-ever quarter for defections from the bundle.

In August, Warner Bros. Discovery booked a $9.1 billion write-down of its TV networks, triggered by the reevaluation of the book value of the segment.

"Like many of our peers in media, we are experiencing the effects of the transition in our video businesses and have been studying the best path forward for these assets," Cavanagh said Thursday. "We are not ready to talk about any specifics yet, but we'll be back to you as and when we reach firm conclusions."

Comcast declined to offer a specific timeline as to when it would announce more details on its plans for the NBCUniversal networks.

Analysts' take

Wall Street analysts on Thursday welcomed the idea of a separation of the cable networks. In recent years the question of separating NBCUniversal from the broadband business has been raised as it's considered to have pulled down the stock.

"Comcast profits are driven by the [broadband] side," said Emarketer principal analyst Ross Benes. "Dividing the TV networks from the rest of the company will allow Comcast to more clearly show growth in its ISP business. A write down on the TV networks would not be surprising."

Analyst Craig Moffett of MoffettNathanson called it a "very welcome development" in a note on Thursday, even if it's just a spinout of the networks and not the entire media business. "Investors have yearned for exactly this, or at least something close to it, for years," Moffett said.

Cavanagh noted that Comcast had stayed out of the fray earlier this year during a back-and-forth sales process for Paramount Global — the storied media company that includes a film studio, portfolio of cable networks and streaming services.

Cavanagh added that the company is considering streaming partnerships, but due to the complicated nature of those deals the company is simply "open to them" at this point.

The role of sports

It's also unclear what a separation of the cable networks business would mean for the company's sports portfolio — as well as the entertainment content from its cable channels that are added to Peacock. Currently much of Bravo's content, such as the "Real Housewives" franchises, airs next day on Peacock.

NBCUniversal has spent billions on the NFL's "Sunday Night Football," the English Premier League, college football and Telemundo's Spanish language rights to major events like the World Cup. The company recently signed a $2.45 billion per year deal with the NBA to air games on its broadcast network and Peacock for 11 years, beginning with the 2025-2026 season.

Some of these events also appear on cable channel USA Network, which became NBCUniversal's pay TV channel location for much of this content after it shuttered NBC Sports Network in 2021.

It's unclear how a separation would affect sports rights contracts, if at all. But divorcing cable networks from NBC and its sports rights could leave them vulnerable to getting dropped by pay TV distributors, said LightShed analyst Rich Greenfield. That would likely doom any publicly traded entity of the cable networks portfolio from the start, Greenfield noted.

"Without marquee sports, will NBCUniversal's cable networks be dropped by distributors and fast-follow [regional sports network group] Diamond Sports into bankruptcy?" Greenfield mused in an interview..

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder to all Summer and Winter Games through 2032.

Clarification: The headline on this article has been updated to clarify that Comcast is exploring a separation of its cable networks business