Comcast to Spin Off NBCUniversal in Surprise Strategy Reversal

**SPEAKER_1** (0:02)
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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Tim Stenovec** (0:32)
Comcast shares, they were up as much as 17% earlier in the session. They're up about 6% right now. This is pretty wild. The company plans to spin off NBCUniversal and Sky, unwinding a strategy that began more than a decade ago after struggling to demonstrate that a cable and media conglomerate would benefit shareholders.

**Carol Massar** (0:48)
I mean, listen, what we have been seeing when it comes to media companies, cable companies in particular, I feel like the build, the add-ons, and now we're seeing the unwinding in a big way.

**Tim Stenovec** (0:58)
Well, let's talk about that unwinding. Chris Palmeri is Bloomberg News Scene Editor and Entertainment Team Leader. He joins us from Los Angeles. Okay, I'm going to go through this slowly for folks who have not written all this down on the whiteboard yet, Chris. NBCUniversal, it'll have the Theme Parks Division, Universal Film and Television Studios, and the NBC and Telemundo Broadcast Networks, Peacock, Bravo, European Media Business, Sky, Comcast will have the company's original cable TV, broadband, and wireless businesses. So does this mean Comcast is getting completely out of content?

**Chris Palmeri** (1:31)
Yes. Yeah. I mean, Brian Roberts, the Chairman's and co-CEO, said today on the call, he said, look, 15 years ago, cable networks were king, and they were buying them. That's when they first invested in NBCUniversal. For a while, it was perceived as they got a great deal.
But the world, as he noted, has changed, and people are cancelling cable. They're not watching, certainly not watching cable TV networks, and broadcast is even struggling.

**Tim Stenovec** (2:01)
I mean, they almost bought this at the peak, Chris, right?

**Chris Palmeri** (2:07)
I think it'll probably spin off at a price that's higher than what they paid 15 years ago, but certainly-

**Tim Stenovec** (2:14)
For the exact same assets?

**Chris Palmeri** (2:17)
Yeah, yeah. But I mean, it's, it'll not, well, they've spun off first, so it won't be the entire collection of assets. Yeah. But I think people are talking about $35, $40 billion valuation for these businesses. That's probably around what they paid all in.
All right.

**Carol Massar** (2:35)
So then, I don't know what happens. Does Netflix want it? Does Apple want it? Does Amazon want it? Like, is that kind of the next step here or does it go alone?

**Chris Palmeri** (2:46)
Well, and we think, you know, Comcast bid on Warner Brothers late last year didn't win, obviously, but we think that that was a catalyst here for what's going on.
It showed a lot of interest in that business, the Warner Brothers business, as challenged as it is. And so, will Netflix, which has sort of publicly admitted that they've whetted their appetite a little bit for mergers and acquisitions come in? Will somebody else? I mean, it's an easier bite to take, you know, than trying to acquire all of Comcast. Now, there's some issues here. If they do a spinoff, they can't immediately do a deal for a couple of years to maintain their tax-free nature. The Roberts family still has pretty much control of the business, about a third of the voting stock and will of NBC as well. So, nobody's going to do a deal without Brian Roberts.

**Carol Massar** (3:35)
So, by spinning it off, it's not like that they think it's worth nothing. They think there's value, but it's better as its own entity.

**Chris Palmeri** (3:44)
It's certainly not been working together. I mean, if you look at Comcast stock price, it's still trading below what it was in 2021 They've taken all these steps. As I mentioned, they spun off the cable networks into Versant. They've been talking about their six big growth businesses, which include wireless phone and theme parks and that.
But it still hasn't worked. The stock was down 22% through Friday's close. So, this is an acknowledgement that they weren't getting any credit for this business. And as they said, they want to be flexible. They want to be able to do deals and move in this new media environment quicker.

**Tim Stenovec** (4:21)
Yeah, it's pretty wild here. I think, you know, anyone going back 15 years ago, when we saw this tie up, people were concerned about antitrust because they controlled the pipes and they also controlled the content. And then there was the whole net neutrality debate a few years later. And none of that really ended up coming to fruition. A big part of that had to do with really the rise of what we now consider the incumbents, like the Netflixes of the world, the YouTubes, the unbundling of cable.