Comcast to spin off NBCU's cable channels

• While most major streaming services are beginning to turn a profit, NBCU's streaming service Peacock is still losing money.

State of play: The deal would see NBCU's suite of cable networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel, spun off into a separate company, alongside some of NBCU's digital assets, such as Fandango and Rotten Tomatoes, GolfNow and Sports Engine.

• Those networks collectively generated approximately $7 billion in revenue over the past 12 months, Comcast said.
• The tax-free spinoff won't include the NBC or Telemundo broadcast networks.
• For now, the company will be called SpinCo. It will have the same dual-class share structure as Comcast.
• SpinCo will be led by longtime NBCU executive and current chairman Mark Lazarus as its CEO. Anand Kini, currently the CFO of NBCUniversal and EVP of Corporate Strategy at Comcast, will serve as CFO and COO.

Zoom in: NBCU's popular reality TV cable network Bravo will not be spun off with NBCU's other cable networks.

• In a statement, Comcast said the spinoff structure positions NBCU with assets that will power Peacock.

The intrigue: In announcing the news, Comcast alluded to a possible strategy in which it acquires or combines SpinCo with other "complementary media businesses,' implying a rollup strategy for distressed cable networks.

• The company, Comcast said in a statement, will be "well-capitalized" and "have significant scale as a pure-play set of assets anchored by leading news, sports and entertainment content," reaching approximately 70 million U.S. households that still pay for cable.

What they're saying: "When you look at our assets, talented management team and balance sheet strength, we are able to set these businesses up for future growth," said Brian L. Roberts, Chairman and CEO of Comcast.

• "With significant financial resources from day one, SpinCo will be ideally positioned for success and highly attractive to investors, content creators, distributors and potential partners."

Flashback: Comcast has explored opportunities to reshape its media unit, but it hasn't made a big move since it acquired Sky in 2018 and divested its stake in Hulu to Disney in 2023.

• The company declined the opportunity earlier this year to explore a merger with rival Paramount.
• NBCUniversal chief Mike Cavanagh last month said that the company would rather consider partnerships in streaming, "despite their complexities," over a merger.

• The last media company to part ways with a significant chunk of its cable portfolio was Fox, which sold its cable channels, like National Geographic and FX, to Disney as part of a broader spinoff of its entertainment assets in 2019.

Zoom out: Comcast is no stranger to streaming joint ventures and partnerships.

• It was part of a streaming joint venture for Hulu with Disney and AT&T until Disney acquired the remainder of Hulu last year.
• Reports suggest the firm had considered a streaming joint venture with Paramount before Paramount agreed on a merger deal with Skydance Media.

The big picture: Comcast's rivals facing similar challenges with their cable businesses have considered spinning off their linear assets, but ultimately backed down.

• Cable television — while facing heavy viewership declines due to cord-cutting — is still mostly very profitable. Despite investor angst around the declining medium, those profits are critical for streaming investments.
• Disney CEO Bob Iger last year teased the possible sale of the firm's linear TV assets, including its broadcast network ABC, but later suggested interest in that idea had cooled.
• Warner Bros. Discovery had reportedly explored splitting its linear assets from its streaming portfolio but ultimately decided selling smaller assets was a better solution than breaking up the company, per the Financial Times.

Editor's note: This story was updated with new details about Comcast's plan.