Comcast to spin off cable networks as subscribers flee the bundle

• Comcast is moving forward with the spinoff of its cable networks, including CNBC, MSNBC and E!.
• The spinoff is expected to take about a year, according to a company memo. Bravo is not part of the spinoff.
• Comcast President Mike Cavanagh said during the company's quarterly earnings call in October that it was considering spinning off the cable networks.

Comcast is moving forward with the spinoff of its cable network channels, including CNBC, MSNBC and E!, the company said Wednesday.

The announcement comes weeks after Comcast executives said during the company's quarterly earnings call that it was considering a split of the cable networks. Comcast President Mike Cavanagh said 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 spun off also include Syfy, Golf Channel, USA and Oxygen, according to a company memo from Cavanagh. Bravo will remain part of Comcast's NBCUniversal and will continue to fuel the company's streaming service, Peacock.

The separation will also include digital assets such as Fandango and Rotten Tomatoes, GolfNow and Sports Engine, the memo said. Cavanagh said in October that NBCUniversal's broadcast network NBC and Peacock would remain with Comcast.

The combined properties of the new entity generated approximately $7 billion in revenue in the 12 months ended Sept. 30, Comcast said in a news release.

The new entity will be led by Mark Lazarus, the current chairman of NBCUniversal's media group. NBCUniversal's chief financial officer, Anand Kini, will serve as the CFO and operating chief.

The separation is expected to take about a year.

"As a standalone company with these outstanding assets, we will be better positioned to serve our audiences and drive shareholder returns in this incredibly dynamic media environment across news, sports and entertainment," Lazarus said in the release. "We see a real opportunity to invest and build additional scale and I'm excited about the growth opportunities this transition will unlock. Our financial strength will also provide capacity for an attractive capital return policy while allowing for investment in the growth of these businesses."

Comcast Chairman and CEO Brian Roberts will maintain economic and voting interests in the company, being referred to for now as "SpinCo," but will not serve as an officer or on the board of directors.

Cutting the cord

Cord cutting continues to impact the traditional TV business. Comcast lost 365,000 TV customers during the third quarter, it said last month. The industry overall lost roughly 4 million traditional pay TV customers in the first six months of the year, according to analyst firm MoffettNathanson.

Still, traditional TV networks remain cash cows for media businesses. Comcast reported in October that third-quarter revenue for its media segment, which is mainly 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 almost 5%.

Disney executives recently said they don't plan to separate their TV networks anytime soon, noting the complexities of doing so, and saying the costs would outweigh the benefits. And Warner Bros. Discovery CEO David Zaslav called the business "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 will give them the optionality to merge with other networks, or potentially be sold to private equity, CNBC previously reported. It will also leave room for further investment in the networks, particularly the entertainment division, one of the people said.

The company had been recently integrating its news businesses — CNBC, MSNBC and NBC News. That will now be undone, according to a person familiar.

Comcast executives will take the next year to determine whether licensing agreements need to be put in place 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 familiar with the matter.

Formal discussions have yet to take place between CNBC, MSNBC and NBC News, one of the people said.

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 Tour and other content, will still be featured on the cable networks, the release said. While NBC's broadcast network and Peacock will still carry sports content, it's expected for it to be shared with the spun-off networks in the future, the person said.

Padding Peacock

Cable network Bravo, known for its "Housewives" franchises and other reality TV, will remain with NBCUniversal because its content is a big part of Peacock, the people said.

Separating the other networks will be simpler as much less of the content is integral to Peacock, one of the people said, noting that only 2% of the viewing on the streamer is of content from the networks that will be separated.

In addition to Bravo, Peacock's platform is heavily padded by Universal's films, and entertainment and sports from the NBC broadcast network.

Peacock has gotten a big boost from NBC's sports programming, particularly the National Football League and the Olympics. During the most recent quarter Peacock added 3 million subscribers, largely due to the Olympics, where it was exclusively streamed, bringing its total to 36 million paid customers.

NBCUniversal's streaming platform continues to rack up losses, but they have narrowed compared to prior quarters. Media companies have focused on making their streaming businesses profitable, with Disney reporting streaming growth and profitability again this past quarter.

Once the cable networks are separated from Comcast, Lazarus will have the power to move forward with a variety of options when it comes to licensing content to other platforms, the person added. The networks' content could find a home on other streaming platforms, and networks would be free to create their own streaming services, the person said.

Read the full memo from Cavanagh:

Dear Colleagues,

Launching a New Company

Today we announced the exciting news that we intend to launch a new publicly traded company comprised of a strong portfolio of our cable television networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and Golf Channel, along with complementary digital assets including Fandango and Rotten Tomatoes, GolfNow and Sports Engine. This new company, which we will refer to as "SpinCo" for now, will be led by Mark Lazarus, who will be Chief Executive Officer, and Anand Kini, who will be Chief Financial Officer and Chief Operating Officer – both of whom raised their hands to lead this initiative. They will build out their management team in the near future with talented leaders from inside and outside NBCUniversal. The transaction will be structured as a tax-free spin to existing shareholders. Brian Roberts will own the same economic and voting interests as he does currently at Comcast, though 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 will take approximately a year.

The powerful assets in SpinCo's portfolio will include:

• A News portfolio including MSNBC, one of the most-watched cable networks industry-wide and a critically important voice in news and perspective journalism, and CNBC, the leader in business and market news;
• Leading Sports properties through USA and The Golf Channel, including Premier League, NASCAR, WWE, the Olympics, college basketball, PGA Tour, 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 leader in true crime; and
• A Digital business that complements the above with a strong portfolio of transactional businesses – GolfNow, Sports Engine, Fandango, and Rotten Tomatoes – each with exceptional growth profiles.

The well-capitalized, independent company will 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 team. SpinCo will provide a diverse and differentiated content offering that will reach approximately 70 million U.S. households, making it highly attractive to investors, content creators, distributors, consumers, and potential partners. The company will have significant cash flow, a strong balance sheet, and the financial flexibility to pursue growth opportunities, both organically and potentially through acquisitions.

The Future NBCUniversal

The future NBCUniversal will have nearly $40 billion in annual revenues, making 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 grow 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 Premier League, NASCAR, Golf, and beginning next year, the NBA; and Bravo, which collectively reach 100 million U.S. households each month and together help power Peacock; Peacock itself, which in 4 years has built a base of 36 million subscribers, and integrates original programming, Universal films and exclusive sports, and news, making it a must-have service that will lead the business forward; and NBC News, the leading News organization in the United States; Telemundo, America's #1 Spanish-language content powerhouse; and our local stations.

These businesses will operate together, drawing on decades of experience creating, producing, and bringing exceptional content to viewers.

More broadly, NBCUniversal will be well-positioned in an evolving industry with our world-class Studios Group and Destinations and Experiences businesses.

• Our Film and Television Studios continue to be home to industry-leading filmmakers and showrunners. Film provided 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 hits, 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 shows across more streaming platforms than its studio peers, also winning the Emmy for Outstanding Comedy with HACKS!

• Our Destinations and Experiences business designs, builds, and operates a growing portfolio of innovative theme parks, resorts, and live entertainment experiences worldwide. It will be supercharged by the opening of Epic Universe next year in Orlando, which will be the most technologically advanced theme park to open ever.

Taken together, the entirety of NBCUniversal will be on a new growth trajectory, fueled by our world-class content, technology, IP, properties, and talent – all working in concert with each other as an integrated media company.

Leadership Team

As we work toward launching SpinCo, I'm also pleased to announce a re-organized leadership team for NBCUniversal. We will begin the process of transitioning responsibilities immediately to the people I'm naming below, who will report to me.

As mentioned above, Mark Lazarus will become Chief Executive Officer of SpinCo and will immediately begin to focus on building and leading the new company.

Cesar Conde will continue in his role as Chairman, NBCUniversal News Group, 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 growth opportunities for NBCUniversal.

Donna Langley will become Chairman of NBCUniversal Entertainment & Studios. In this expanded role, she will lead greenlight decisions across the NBCU enterprise and have full oversight of all entertainment programming and marketing across Peacock, Bravo, and NBC—including primetime and late night—and will continue to oversee the global creative strategy, business operations, production, acquisitions, marketing, and distribution for our portfolio of award-winning Film and Television Studios.

Matt Strauss will become Chairman of the NBCUniversal Media Group. He will continue to lead Direct-To-Consumer, including Peacock, International Networks, and Global Streaming, while also taking on responsibility for NBC Sports, Advertising Sales, Content Distribution, Decision Sciences & Research, and NBC Broadcast Affiliate Relations. 

Mark Woodbury will continue in his role as Chairman and CEO of Universal Destinations & Experiences where he oversees all aspects of its four destinations worldwide — Universal Orlando Resort, Universal Studios Hollywood, Universal Studios Japan, and Universal Beijing Resort — a global consumer products and gaming business as well as the development of a location-based entertainment business.

My core corporate leadership team will also include the following people:

Kim Harris will continue in her role as Executive Vice President of Comcast Corporation and General Counsel of NBCUniversal.

Adam Miller will become Chief Operating Officer for NBCUniversal, reflecting the leadership he provides across all aspects of the company.

Craig Robinson will continue his role as Executive Vice President and Chief Diversity Officer for NBCUniversal.

With Anand Kini transitioning to SpinCo, we will commence a search of internal and external candidates for a new Chief Financial Officer.  

The Path Forward

Our effort to launch SpinCo as a successful public company will be done well versus done quickly. We have begun standing up a process and dedicated resources to ensure that we identify all that needs to be done and that it is done carefully and thoughtfully, without impacting the critical work everyone is doing to drive our priorities and businesses forward. I have asked Anand Kini and Adam Miller to project manage this transition in addition to their regular responsibilities, starting immediately through the completion of the transaction. 

In the weeks and months ahead, alongside your managers, we will do our best to keep you informed of meaningful updates. More information about SpinCo will be available on NBCUNow and on a new internal resource page that will be available later today.

In the interim, the most important thing everyone can do is remain focused on the work at hand to propel our continued success, so when the moment comes to launch SpinCo, both NBCUniversal and SpinCo have the same momentum we carry into this moment.

I want to thank everyone who has worked on this project so far and in advance for the work that will be required over the next year.

I believe the effort will be well worthwhile, as this project will inject energy and renewed focus in both the new company 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 offense in a complex and evolving media landscape.

Mike Cavanagh,
President, Comcast Corporation

— CNBC's Julia Boorstin contributed to this article.

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