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American cable giant Comcast, which back in 2018 gobbled Sky’s pan-European TV and broadband ISP business with a bid of £30bn (here), has today announced that they intend to separate their media and technology businesses into public companies through a “tax-free spin-off” of NBCUniversal and Sky.
The move will create two companies – Comcast and NBCUniversal (existing Comcast shareholders will own shares in both companies). Comcast’s Board and management team claim that each company will thus be better positioned to pursue its “own strategic priorities, invest for growth and create long-term shareholder value as independent entities“.
Under the change, Comcast will naturally be the technology company, serving residential and business customers through its broadband, wireless and entertainment platforms. Meanwhile, NBCUniversal will become a premier global media and entertainment company, consisting of Universal’s film and television studios, NBC and Telemundo networks, Peacock, Bravo and Sky’s UK and European media business.
In short, Comcast believes its broadband / network business and its media business are worth more, while also being easier to run, as separate companies. But there’s no escaping that this is one of the biggest media industry restructurings in recent years.
Brian L. Roberts, Chairman and Co-CEO of Comcast Corp, said:
“This is a very exciting day for our company. The transaction we are announcing will unlock a more entrepreneurial management approach and open up a multitude of new opportunities for each business. I very much look forward to helping guide our collective growth for this next chapter.
Mike Cavanagh will lead the new NBCUniversal media and entertainment company as CEO. Mike is one of the finest executives I’ve ever worked with and a trusted partner. His vision is for a unique, independent, focused company that will be home to some of the industry’s most valuable brands and assets across theme parks, film, television, streaming, sports and news. This new company will be well-positioned to pursue the significant opportunities that lie ahead, to partner across the media and entertainment ecosystem, and will be poised to grow.
I am also incredibly pleased to welcome back Michael Angelakis as Comcast CEO. As our widely admired former CFO, Michael’s deep knowledge of the business and passion for technology – combined with the leadership of Steve Croney, Jason Armstrong and the entire Comcast management team – will serve us well as we continue to take bold actions in today’s competitive environment. Our recent momentum is the launchpad to propel our advanced network, substantial customer base, and outstanding products to even greater success. Michael’s drive, proven track record and the tremendous level of respect he commands within our organization and beyond, make me exceptionally excited to work closely with him again.”
The wider media and telecoms market has gone through a lot of dramatic changes since Comcast took the helm, such as with the rapid rise of video streaming (i.e. replacing traditional TV). By placing Sky inside NBCUniversal the new company should be better able to compete and adapt, all without having to share priorities with a US-focused broadband business. The move might also make it easier for NBCUniversal to merge with other media companies in the future.
At this stage we don’t expect there to be any sudden or dramatic changes for customers of Sky UK to worry about. The initial focus is likely to be on the separation process and establishment of independence. But over time we may start to see more changes creeping in, for either good or ill. Some questions may also arise in regard to debt and investment, since pay TV and content rights can be a very expensive business (e.g. sports rights), but NBCUniversal might not have the same security on this front as they did when being part of Comcast.
The move is particularly noteworthy given how Sky has recently been in the news over their expected £1.6bn swoop on ITV’s broadcasting and streaming arm, which we presume would now be placed within NBCUniversal. The proposed deal covers the ITVX platform, along with ITV’s free-to-air channels, but not ITV’s Studio operations.
The separation is expected to be completed through a tax-free spin-off to Comcast shareholders in “approximately one year“, subject to the satisfaction of the usual conditions, regulatory approvals and financing arrangements etc.