Comcast Explores Spin-Out of Cable Business

Comcast Explores Spin-Out of Cable Business - The New York Times

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Comcast Explores Spin-Out of Cable Business

The company’s president, Mike Cavanagh, said the company was also considering finding a partner for its Peacock streaming service.

Comcast, one of the nation’s biggest television companies, said on Thursday that it was weighing whether to cleave its cable networks from the rest of the company, a move that could put it in position to shake up the struggling cable industry.

Mike Cavanagh, the company’s president, said on an earnings call that the company could put the cable networks owned by its NBCUniversal division — which include Syfy, Bravo and USA — into a new company.

As Americans continue to drop their cable TV subscriptions, cable networks are generally considered the most problematic part of traditional media businesses like NBCUniversal.

“Like many of our peers in media, we are experiencing the effects of the transition in our video businesses, and we have been studying the best path forward for these assets,” Mr. Cavanagh said.

Mr. Cavanagh said that the new company would be owned by Comcast shareholders and that it would be “well capitalized” — implying that it would not be loaded up with debt from its parent company, a common tactic for corporate spinoffs. NBC — a broadcast network owned by Comcast — would probably not fit into the new company.

His comments came after Comcast reported a 3.3 percent decrease in net income last quarter, even as revenue increased by 6.5 percent, to $32 billion. The company reported losses of 87,000 U.S. customers for its broadband services compared with the same period last year, and cable TV subscribers continued to decrease. The company’s share price was up nearly 3 percent in midmorning trading.

Mr. Cavanagh said Comcast would look to participate in streaming partnerships, potentially marrying its Peacock streaming service with one operated by another company. That could allow Comcast to share the exorbitant costs of operating a streaming business — Peacock lost $2.7 billion last year, and contributed to the overall income decline reported on Thursday — with a partner, and sell a service with a wider array of TV shows and movies.

Comcast has already teamed up with Paramount, the owner of CBS and MTV, in Britain to start a streaming joint venture called SkyShowtime. Though Mr. Cavanagh said Comcast was open to streaming partnerships, he seemed to imply Comcast would be selective, telling analysts on Thursday’s call that reaching a deal would be “very complicated” and limited to “when a good idea comes along.”

Mr. Cavanagh noted that Comcast had chosen not to participate in the bidding war this year for Paramount, which ultimately agreed to a merger with Skydance, a Hollywood studio run by David Ellison. During a question-and-answer session with analysts, Mr. Cavanagh explained that there was a very “high bar” to whole company mergers-and-acquisitions for Comcast.

As cable networks become increasingly frail, dealmakers across the media industry have long speculated that one player would look to buy up a bundle of networks and use their combined heft to negotiate more effectively with distributors. On Thursday’s earnings call, one analyst, Jessica Reif Ehrlich, asked whether Comcast would look to execute this strategy if it went ahead with its new pure-play cable company.

In response, Mr. Cavanagh said Comcast would look to “play offense” if it went through with its plan, but did not elaborate.

Benjamin Mullin reports on the major companies behind news and entertainment. Contact him securely on Signal at +1 530-961-3223 or at benjamin.mullin@nytimes.com. More about Benjamin Mullin

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