The Scoop
Corporate spinoffs are born as takeover prey. They’re often unloved, underperforming divisions, flung out to shareholders wearing a “come and get it” sign for potential acquirers. About a quarter of $1 billion-plus corporate spinoffs that debuted between 2016 and 2021 have already been snapped up, according to an analysis of S&P Capital IQ data.
Comcast is working on a different idea. As it advances a separation of its cable channels including CNBC and MSNBC, it plans to send them out with a clean balance sheet and the financial firepower to roll up other media assets. In other words, it’ll be a predator, not prey.
Under current plans, the new entity would carry little of Comcast’s $101 billion of debt, people familiar with the matter said. That would give it the ability to borrow for acquisitions in a cable industry that’s rapidly deteriorating as viewers move to streaming networks, YouTube, and free ad-supported models.
Comcast President Mike Cavanagh hinted as much last month, when he said the company was exploring “creating a new well-capitalized company,” resisting the temptation to unburden itself of debt in the process. (The fact that Comcast’s largest shareholder, the family of CEO Brian Roberts, will own a big chunk of SpinCo likely reinforces some financial discipline.)
To be sure, a careful balancing act would be needed to give the new entity room to run without endangering Comcast’s own credit rating or dividend.
The company sees an opportunity to scoop up networks that legacy Hollywood players like Warner Bros. Discovery, Paramount, or even Disney might jettison to focus on new platforms. Declining media assets can be a good, if terminal, business — Apollo has profitably managed the dregs of AOL and Yahoo. Not an inspiring future for the iconic cable news brands, but a solvent one.