Comcast pulls the plug on itself brilliantly

NEW YORK: Call it the great uncoupling. Comcast, the American cable-and-content colossus that spent decades bundling everything from broadband to Bravo under one roof, has decided that togetherness is overrated. On Monday, it announced plans to spin off NBCUniversal and Sky into a separate, independently listed company, a tax-free split that would cleave its cash-rich pipes business from its glamorous, if battered, media crown jewels.

Wall Street loved it. Shares shot up more than 20 per cent in premarket trading before the opening bell had even cleared its throat.

The logic, frankly, writes itself. Comcast’s broadband arm is a reliable, if unglamorous, money machine, the kind that quietly mints cash while the neighbours stream Netflix. The media side, meanwhile, has been fighting for its life against cord-cutting, streaming giants and a consolidating industry that is reshaping itself at breakneck speed. Running both under one tent, the board finally concluded, was like hitching a tortoise to a racehorse and wondering why neither was winning.

Under the restructured universe, the new Comcast keeps the connectivity crown broadband, wireless and business services, serving over 65 million homes and businesses across America. Think pipes, packets and profit margins.

The new NBCUniversal gets the glitter, Universal theme parks, the NBC and Telemundo networks, Peacock, Bravo, and Sky, the European operation that Comcast snapped up for a princely $39 billion in 2018 and has been nursing ever since.

Brian Roberts, chairman and co-chief executive officer of Comcast, will remain active in both companies’ leadership. Mike Cavanagh, currently co-chief executive officer, moves across to lead NBCUniversal as its chief executive officer. Returning to the Comcast helm as chief executive officer is Michael Angelakis, the firm’s widely respected former chief financial officer, who will initially join as a strategic adviser before stepping fully into the top job post-separation.

“This is a very exciting day for our company,” Roberts said, with the barely contained glee of a man who has just reorganised the furniture and is rather pleased with the result.

The spin-off is expected to be wrapped up in roughly a year, subject to the usual regulatory pleasantries and board approvals. Comcast plans to hang on to a stake of up to 19.9 per cent in the new NBCUniversal for up to a year post-split, before monetising it in a “tax-efficient manner” corporate speak for selling slowly and smartly.

Goldman Sachs and PJT Partners are advising on the financial gymnastics, Davis Polk & Wardwell is handling the legal fine print.

The backdrop, of course, is an industry in full churn. The Paramount-Skydance-Warner Bros Discovery mega-deal looms large, fixed wireless providers are nipping at Comcast’s broadband heels, and streaming has made a mess of the old cable bundle that everyone once took for granted.

The great unbundling, it turns out, is not just for consumers anymore. Comcast has now done it to itself and the market, for one, is applauding.