As more people leave behind cable TV for streaming options, Comcast Corporation made an announcement that signals further change for the medium. What does it mean for viewers?
In a Wednesday press release, Comcast announced that it intends to create a new publicly traded company “comprised of a strong portfolio of NBCUniversal’s cable television networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and Golf Channel along with complementary digital assets including Fandango and Rotten Tomatoes, GolfNow and Sports Engine, through a tax-free spin-off.”
Before the release, the news was first reported by The Wall Street Journal and then confirmed to NBC News on Tuesday by two people familiar with the matter. The new company has already been named SpinCo and Mark Lazarus, the current chairman of NBCUniversal Media Group, will serve as the company’s chief executive officer.
According to Comcast President Mike Cavanagh, the “transaction positions both SpinCo and NBCUniversal to play offense in a changing media landscape,” and Comcast said its content will reach approximately 70 million households in the U.S. Cavanaugh also said the move will put NBCUniversal – which Comcast bought a majority stake in 2009 – on a growth trajectory.
“As a standalone company with these outstanding assets, we will be better positioned to serve our audiences and drive shareholder returns in this incredibly dynamic media environment across news, sports and entertainment,” said Lazarus.
NBC noted that the announcement comes at a time when interest in the traditional cable television bundle fades as consumers shift to streaming alternatives.
Rich Greenfield, a media and technology analyst and co-founder of research firm LightShed Partners cited by the outlet, said that what the move really means is an exit from the cable news business.
“This is them saying we don’t want to be in this business,” he said. “This is no longer a growth business. It’s going to be around for a long time, but it’s just no longer a growth business.”
Cable TV has been around since 1948, per the NCTA, but it started gaining steam in the 1970s with the birth of networks like HBO, C-SPAN, ESPN and Nickelodeon. In 1980, the Cable News Network (CNN) started broadcasting 24-hour news, according to Stanford University.
While CNN suffered at first, its ratings took off during the First Gulf War. Other cable news networks followed, including CNBC and MSNBC. CNBC launched in 1989 as a “whacky bet” by NBC executives that viewers would be interested in a consumer news channel. MSNBC launched in 1996 as a joint venture between tech company Microsoft and NBC, along with a website.
Since then, the internet and streaming services have had a growing impact on how people consume news and media overall. Just this week, Audacy reported that one in five adults get their news from social media influencers.
However, cable TV still has a significant number of viewers.
According to NBC, Comcast’s cable portfolio still contributes to its financial bottom line and helps expand its cultural footprint. Last December, Variety reported that NBC was the country’s most-watched TV network, but that its viewership dropped 12%. MSNBC was the eighth most watched network, but it “defied the odds” with a 2% increase in viewership.
“Many cable channels are still profitable businesses, with some continuing to generate strong cash flows for their corporate owners. But the media industry writ large considers the cable marketplace to be in decline,” said NBC.
In recent years, media companies have invested in streaming platforms such as NBCUniversal’s Peacock. While Peacock added 3 million subscribers during the third fiscal quarter, Comcast lost 365,000 cable customers. With the SpinCo announcement, Comcast’s stock price rose by about 0.5% in premarket trading Wednesday.
The new SpinCo business structure would separate MSNBC and CNBC from the central newsgathering operations of NBC News. NBC said Wednesday that it is not clear “whether the cable news channels and the network’s core news division would continue to share editorial resources.”
Variety reported Wednesday that journalists are concerned about what that means going forward, and that MSNBC could have to consider changing its name and familiar markings with the move. It said: “Lazarus told an audience that included Rachel Maddow, Chris Jansing and Katy Tur that he was not sure whether MSNBC would have to change its identity as part of the transaction.”
As for CNBC, Business Insider reported Wednesday that “anchors projected an air of mild panic about the news that Comcast would spin off the network,” and turned to dark humor. Anchor David Faber even likened their situation to being on a sinking life raft.