Comcast Reverses Course, Will Spin Off NBCUniversal

Comcast is throwing in the towel on a 15-year bid to achieve greater returns through vertical media integration, unveiling plans to spin off NBC Sports parent company NBCUniversal as a separate entity. 

Under the dramatic plan rolled out early Monday, a newly separate and publicly traded NBCUniversal will house the NBC and Telemundo networks, Peacock, Bravo, the company’s theme parks and film and television studios, and the European media business Sky. 

Comcast, meanwhile, will return to its core operations of broadcast connectivity, cable distribution, wireless, and business services—largely what its profile was before acquiring majority control of NBCUniversal in 2011.

“It has become clear that our technology and media businesses each have compelling opportunities in front of them that are distinct in nature and are best pursued … with tailored investment priorities,” Comcast co-CEO and chair Brian Roberts said Monday morning in an investor call. 

As Comcast refocuses itself, though, it will do so with another significant change: it will no longer be led by a Roberts family member. While Brian Roberts, the son of company founder Ralph Roberts, will be involved in the leadership of both entities, former Comcast CFO Michael Angelakis will become CEO of that company. Comcast co-CEO Mike Cavanagh, meanwhile, will become NBCUniversal CEO.

“One of the defining characteristics of this company has been our willingness to embrace change, look ahead, and position ourselves for the future, and today’s announcement is very much in that tradition,” Roberts said. 

This split closely follows a similar one in which Comcast spun off most of its cable networks, with that entity formally beginning early this year as Versant. NBCUniversal and Comcast will remain separate from Versant, so what was one previously within one large corporation is now becoming three. 

Despite that, Roberts insisted that the latest split is not about “separating what we built together,” but rather, “positioning two exceptional businesses to move forward with greater focus, agility, and the ability to fully capitalize on the opportunities ahead.”

That sentiment is the exact opposite from just five months ago, when Cavanagh said in an earnings call that NBCUniversal “doesn’t get stronger by being smaller as a standalone entity.”

Big Sports Impacts

Comcast said Monday that it intends to complete the NBCUniversal split in about a year, subject to various regulatory approvals. Post-closing, Comcast intends to retain a minority stake of up to 19.9% in NBCUniversal resale for up to a year. That interest, however, will ultimately be sold. 

NBCUniversal—and NBC Sports within it—will then be entering one of the most dynamic markets for sports rights in recent history as the available content coming to market between 2027 and 2030 is set to include the NFL, MLB, English-language World Cup rights, and potentially the NHL, among others. 

There will be a solid base of the Olympics for NBCUniversal, though, as the company reached a $3 billion extension with the IOC last year running through 2036. 

“As an independent company, NBCUniversal will have even greater flexibility to invest behind its greatest opportunities, expand partnerships, and compete with greater agility in a rapidly changing media landscape,” Roberts said. 

Investors, meanwhile, loved the move, as Comcast shares opened Monday trading with a 12% lift. Wall Street pressures are informing much of the forthcoming split as Comcast shares had fallen more than 16% so far this year, and by nearly a third over the last 12 months. Going back even further, Comcast stock is largely flat since 2012. By comparison, the Dow Jones Industrial Average has roughly quadrupled during that time period. 

“Obviously, the stock had not performed. Comcast had to do something,” LightShed Partners analyst Rich Greenfield said Monday on the Versant-controlled CNBC. “For 14 years, the stock hadn’t moved.” 

More broadly, Wall Street has generally eyed multilayered media and entertainment businesses with a fair amount of skepticism as disruption accelerates in that industry. Beyond Comcast’s own market troubles, Endeavor’s difficult, four-year attempt to get investors to fully buy in to its interwoven operations ultimately led to it going private last year. 

ESPN parent company Disney has a corporate profile somewhat similar to Comcast, and it also has a major presence in broadcast television, streaming, film production, and theme parks. Despite a well-received leadership change earlier this year and an upcoming Super Bowl, Disney shares are down nearly 12% this year, and down 20% in the last 12 months.

Despite all that, several other media businesses are still making a contrasting move toward greater scale and consolidation, including Paramount’s planned $110 billion takeover of Warner Bros. Discovery, the recently announced Fox acquisition of connected TV company Roku, and local TV giant Nexstar’s pending purchase of industry rival Tegna.