Comcast’s SpinCo: New Home for USA Network, Golf Channel, Sports Rights

Comcast is making good on its recent pledge to deal with the ongoing decline in linear television, unveiling a formal plan to spin off most of its cable networks.

Just three weeks after first mentioning even the possibility of such a move, the NBC parent company will place the bulk of its cable network holdings such as USA Network, CNBC, MSNBC, and E! into a separate, publicly traded company, currently carrying the working name of SpinCo. The new entity will also include certain digital assets such as the online booking service GolfNow and the youth sports registration platform Sports Engine.

The move certainly carries a defensive posture, as it moves linear TV businesses that have been battered by accelerating cord-cutting away from healthier and faster-growing assets in the Comcast portfolio, such as its broadcast television holdings, theme parks business, and the Peacock streaming service. But Comcast insisted there is an opportunistic bent to the effort, too, suggesting it could ultimately lead to a variety of deals with other networks or private investors, including potential purchases of other networks. 

“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,” said Comcast chair and CEO Brian Roberts. 

Still, the move also is something of a clear acknowledgment of how dramatically the traditional pay-TV universe has declined, now standing at about 54 million U.S. households, roughly half the level of a decade ago.

Investors were largely neutral on the news, with Comcast shares rising 1.6% to $42.99 per share on Wednesday after a small afternoon rally. Completion of the spin-off will require about a year. Other critical assets, such as NBC Sports and the NBC broadcast network, will remain as is within NBCUniversal, which is still a core part of Comcast. 

Sports Focus

Sports will be a meaningful pillar of SpinCo, as the inclusion of USA Network and Golf Channel in the new company includes live rights to a variety of top-tier properties, including the Premier League, NASCAR, PGA Tour, LPGA, and multiple conferences in college basketball. 

The involvement of GolfNow and Sports Engine also brings perhaps less glamorous, but steadily performing and more transactionally oriented businesses into the new entity.

“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,” Comcast president Mike Cavanagh wrote in a memo to employees. 

Will Others Join?

Perhaps the most pressing question is whether any other major media company such as Fox or Disney will make a similar move with its linear cable assets. ESPN parent Disney has arguably come closest, inviting outside inquiries into equity partnerships for some of its networks, most notably the sports media giant. 

During the recent run of quarterly earnings reports, each of Comcast’s main contemporaries was queried by analysts in some fashion about the possibility of making a similar spin-off move. Thus far, the answer appears to be generally no, though Warner Bros. Discovery CEO David Zaslav said the TNT Sports parent company is exploring “all things operationally and strategically to ensure shareholder value.” But should SpinCo show some success, copycat endeavors could surface—ultimately inviting a potential of broader mergers of cable networks currently held by different companies.

“I don’t see how we could ever do that,” said Fox executive chair and CEO Lachlan Murdoch about the prospect of pursuing a similar cable spin-off. “I think breaking apart a part of the business would be very difficult, both from a cost point of view and from a revenue and a promotional synergy point of view.”