Comcast plan to spin-off cable TV channels should avoid regulatory hurdles – analystComcast plan to spin-off cable TV channels should avoid regulatory hurdles – analyst

Comcast's plan to spin-off a subset of NBCUniversal's cable TV network portfolio should be able to move forward without coming up against any major regulatory hurdles, a top policy analyst said.

Comcast announced Wednesday that it intends to create a new, publicly traded company comprising the bulk of its cable TV networks, including USA Network, CNBC, MSNBC, Oxygen, E!, Syfy and Golf Channel, along with digital assets that include Fandango, Rotten Tomatoes, GolfNow and Sports Engine.

Not included in the planned spin-off is the NBC broadcast network, the Peacock premium streaming service and Bravo, a cable network that fuels Peacock with original programming and series, including the "Below Deck" and "Real Housewives" franchises. It is not yet clear how the plan will affect the structure between NBC News, MSNBC and CNBC.

Comcast estimates that the networks tied into the spin-off have a reach of about 70 million US households. The networks in the group generated about $7 billion in revenue for the 12 months ended September 30, 2024. Though the spin-off will operate as an independent business, it will enter into a transition services agreement with NBCU.

The transaction for what will result in a unit currently being referred to as "SpinCo" is expected to take a year. SpinCo is set to be led by Mark Lazarus, the current chairman of NBCU Media Group, in the CEO role. Anand Kini, current CFO of NBCU, will be the spin-off's CFO.

No FCC review required

The regulatory path forward won't be particularly rocky, reckons New Street Research policy analyst Blair Levin.

The planned, tax-free spin-off won't involve any transfer of Federal Communications Commission (FCC) licenses, so it won't face an FCC review, Blair Levin explained in a research note. The plan, he added, also won't face antitrust issues as it would not increase horizontal or vertical concentration.

Levin noted that the incoming Trump administration is an "X factor" as it's possible the President-elect might interfere or otherwise slow-down Comcast's plan without potential concessions. "We continue to believe that the Trump Administration cannot cause material problems with the spin-off," he said.

Spin-off amid pay-TV's ongoing decline

Comcast's plan comes a few weeks after the company announced it was studying a spin-out of some of its cable TV networks, a part of the business that is being dragged down by pay-TV cord-cutting. Comcast's plans are taking shape as peers such as Paramount Global and Warner Bros. Discovery have taken billions in write-downs of their linear TV networks.

"Like many of our peers in media, we are experiencing the effects of the transition in our video businesses and have been studying the best path forward for these assets," Comcast President Mike Cavanagh said at the time. He said today that the plan will allow both SpinCo and NBCU "to play offense in a changing media landscape."

LightShed analyst Richard Greenfield told CNBC's "Squawk Box" that the plan is a "very clear, direct statement by Comcast" that it does not want to be in the cable networks business and that "this is no longer a growth business."

MoffettNathanson analyst Craig Moffett has already called the plan, which aims to carve out a struggling portion of NBCU's portfolio, a "welcome development." Investors have "yearned for exactly this, or at least something close to it, for years," Moffett added.

The planned spin-off is also driving speculation that it could pave the way for a sale of the assets or a consolidation/roll-up with Warner Bros. Discovery or Paramount Global.

The resulting spin-off could look to expand by acquiring other cable channels and develop its own streaming services and packages that could be used to strike distribution deals with companies such as Amazon, Bloomberg reported.

Editor's note: The story has been updated with speculation from Bloomberg regarding future plans for the spin-off.