Comcast (CMCSA) has officially announced plans to spin off several of its cable network channels, including CNBC, MSNBC, E!, and others, into a standalone entity. This move follows an earlier report from the Wall Street Journal and weeks of speculation. Furthermore, Comcast executives had hinted at the possibility during the media and entertainment conglomerate’s October earnings call.
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At the time, Comcast President Mike Cavanagh described the potential spinoff as a “new, well-capitalized company” that would remain under shareholder ownership and include a robust portfolio of cable networks.
How Does CMCSA Plan to Execute the Spin-Off?
Giving more details, the company stated that the channels to be spun off include Syfy, Golf Channel, USA, and Oxygen, alongside digital assets such as Fandango, Rotten Tomatoes, GolfNow, and Sports Engine. However, the company’s Bravo channel will stay with Comcast’s NBCUniversal.
Meanwhile, NBC and Peacock will remain integral parts of Comcast. As viewers shift from traditional pay TV to streaming, Comcast has focused on strengthening Peacock, its streaming platform.
The new independent company, temporarily dubbed “SpinCo,” is expected to reach around 70 million U.S. households with a diverse content offering. This spin-off is likely to be completed in the next year.
Mike Cavanagh, President of Comcast commented, “This transaction positions both SpinCo and NBCUniversal to play offense in a changing media landscape.”
Furthermore, this spin-off is expected to be accretive to revenue growth at Comcast and “neutral to Comcast’s leverage position.”
CMCSA Has Shuffled the Leadership Team
Following the spin-off, Mark Lazarus, NBCUniversal’s current media group chairman, will lead the new entity, while Anand Kini, NBCUniversal’s CFO, will serve as its CFO and operating chief. In addition, Comcast’s CEO Brian Roberts will retain economic and voting interests in SpinCo but will not hold an operational role or board seat.
Is CMCSA a Buy or Sell?
Analysts remain cautiously optimistic about CMCSA stock, with a Moderate Buy consensus rating based on 12 Buys and seven Holds. Over the past year, CMCSA has inched higher by more than 1.9%, and the average CMCSA price target of $49.47 implies an upside potential of 16.5% from current levels.
