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Roula Khalaf, editor-in-chief of the FT, selects her favorite stories in this weekly newsletter.
Call it a taste. Comcast, the U.S. media conglomerate, announced last month that it would consider spinning off its cable television networks, a declining, albeit profitable, business that will eventually disappear in the era of digital streaming. While Trump’s election is expected to unleash the animal spirits of dealmakers, we can expect a wave of M&A in the media, with the company’s poor economic situation becoming a catalytic event.
Comcast itself is a classic example of the type of Frankenstein’s monster, created over several eras, that no longer makes sense in media. Two-thirds of its $120 billion in annual revenue comes from “dumb pipes” – broadband and cellphone services that collectively have more than 30 million customers. Wall Street has deteriorated in this sector, however, as subscriber additions have turned negative and investment costs remain high.
The Philadelphia-based company also owns broadcaster NBCUniversal, which produces and distributes films and television programs, as well as several pay television networks such as CNBC and Bravo. Networks are bleeding subscribers as cable and satellite television become less popular.
The 80 percent drop in the stock price of AMC, a privately held cable company, over the past five years suggests that investors don’t like these trends. But splitting up its cable networks would rid Comcast of an albatross.
Comcast’s upstart streaming offering Peacock is a more intriguing prospect. Its subscribers jumped this year to 36 minutes, helped by NBC’s coverage of the Olympics. But its losses remain massive, at nearly $1 billion so far this year. Comcast management says it is open to “partnerships” for Peacock – a nod to the brutal economics of Internet-based video.
With a hands-off Trump administration, Peacock could seek to merge with a rival such as Paramount Plus or Warner Bros. Discovery’s Max – something the Biden regime might have disapproved of. Warner boss David Zaslav said Thursday that moving to the White House offered an opportunity for consolidation that “would have a real positive and accelerated impact on this industry that needs it.”
Comcast, like rival Walt Disney, at least has a theme park division to support it while it figures out how to distribute content profitably. Comcast shares, for example, are flat this year. Questions such as how to share content within a divided empire are not easy to resolve. However, with a trading window suddenly opening, next year is a good time to try.
