Comcast to spin off cable networks as subscribers flee the bundle

Comcast is moving forward with the spinoff of its cable network channels, including CNBC, MSNBC and E!, the company said Wednesday.

The announcement comes weeks after Comcast executives said during its quarterly earnings call in October it was considering a split of the cable networks. Comcast President Mike Cavanagh said at the time the company was exploring creating "a new, well-capitalized company owned by our shareholders and comprised of our strong portfolio of cable networks."

The networks being spun off also include Syfy, Golf Channel, USA and Oxygen, according to a company memo from Cavanagh. Bravo will remain part of Comcast's NBCUniversal.

The separation will also include digital assets such as Fandango and Rotten Tomatoes, GolfNow and Sports Engine, the memo said.

The separation is expected to take about a year.

The new entity will be led by Mark Lazarus, the current chairman of NBCUniversal's media group. NBCUniversal's Chief Financial Officer, Anand Kini, will serve as the CFO and operating chief of the new entity.

Comcast Chairman and CEO Brian Roberts will maintain economic and voting interests in the company, being referred to for now as "SpinCo," but will not serve as an officer or on the board of director.

By separating the cable networks, it will give them the optionality to merge with other networks, or potentially be sold to private equity, CNBC previously reported.

Cavanagh said in October that NBCUniversal's broadcast network NBC and Peacock would remain with Comcast.

Comcast is moving forward with the decision as millions of customers exit the traditional pay TV bundle in favor of streaming. The company has been beefing up NBCUniversal's streaming platform Peacock in recent years.

Although cord cutting has impacted the business, traditional TV networks remain cash cows for media businesses. Comcast reported in October that third quarter revenue for its media segment, which is mainly comprised of the TV networks, was up nearly 37% to $8.23 billion, largely due to the Olympics. Without the Summer Games, revenue was up almost 5%.

Comcast executives will take the next year to determine whether licensing agreements need to be put in place, and whether MSNBC and CNBC will continue to work with NBC News, according to two people familiar with the matter.

Formal discussions have yet to take place between CNBC and MSNBC and NBC News, one of the people said.

Dear Colleagues,

Launching a New Company

Today we announced the exciting news that we intend to launch a new publicly traded company comprised of a strong portfolio of our 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. This new company, which we will refer to as "SpinCo" for now, will be led by Mark Lazarus, who will be Chief Executive Officer, and Anand Kini, who will be Chief Financial Officer and Chief Operating Officer – both of whom raised their hands to lead this initiative. They will build out their management team in the near future with talented leaders from inside and outside NBCUniversal. The transaction will be structured as a tax-free spin to existing shareholders. Brian Roberts will own the same economic and voting interests as he does currently at Comcast, though he will not serve on the SpinCo board or management team. While we don't have a precise timetable for completing the transition, we are estimating that it will take approximately a year.

The powerful assets in SpinCo's portfolio will include:

The well-capitalized, independent company will be positioned to lead in the changing landscape for cable networks given the strength of its portfolio and the quality and focus of its management team. SpinCo will provide a diverse and differentiated content offering that will reach approximately 70 million U.S. households, making it highly attractive to investors, content creators, distributors, consumers, and potential partners. The company will have significant cash flow, a strong balance sheet, and the financial flexibility to pursue growth opportunities, both organically and potentially through acquisitions.

The Future NBCUniversal

The future NBCUniversal will have nearly $40 billion in annual revenues, making it one of the largest media companies in the world. More importantly, each of the businesses within NBCUniversal will be strategically aligned and positioned to grow for years to come.

These businesses will operate together, drawing on decades of experience creating, producing, and bringing exceptional content to viewers.

More broadly, NBCUniversal will be well-positioned in an evolving industry with our world-class Studios Group and Destinations and Experiences businesses.

Taken together, the entirety of NBCUniversal will be on a new growth trajectory, fueled by our world-class content, technology, IP, properties, and talent – all working in concert with each other as an integrated media company.

Leadership Team

As we work toward launching SpinCo, I'm also pleased to announce a re-organized leadership team for NBCUniversal. We will begin the process of transitioning responsibilities immediately to the people I'm naming below, who will report to me.

As mentioned above, Mark Lazarus will become Chief Executive Officer of SpinCo and will immediately begin to focus on building and leading the new company.

Cesar Conde will continue in his role as Chairman, NBCUniversal News Group, where he will oversee NBC News and NBC News Now, Telemundo Enterprises, and our NBCU Local stations, and will work closely with me on other growth opportunities for NBCUniversal.

Donna Langley will become Chairman of NBCUniversal Entertainment & Studios. In this expanded role, she will lead greenlight decisions across the NBCU enterprise and have full oversight of all entertainment programming and marketing across Peacock, Bravo, and NBC—including primetime and late night—and will continue to oversee the global creative strategy, business operations, production, acquisitions, marketing, and distribution for our portfolio of award-winning Film and Television Studios.

Matt Strauss will become Chairman of the NBCUniversal Media Group. He will continue to lead Direct-To-Consumer, including Peacock, Networks, and Global Streaming, while also taking on responsibility for NBC Sports, Advertising Sales, Content Distribution, Decision Sciences & Research, and NBC Broadcast Affiliate Relations. 

Mark Woodbury will continue in his role as Chairman and CEO of Universal Destinations & Experiences where he oversees all aspects of its four destinations worldwide — Universal Orlando Resort, Universal Studios Hollywood, Universal Studios Japan, and Universal Beijing Resort — a global consumer products and gaming business as well as the development of a location-based entertainment business.

My core corporate leadership team will also include the following people:

Kim Harris will continue in her role as Executive Vice President of Comcast Corporation and General Counsel of NBCUniversal.

Adam Miller will become Chief Operating Officer for NBCUniversal, reflecting the leadership he provides across all aspects of the company.

Craig Robinson will continue his role as Executive Vice President and Chief Diversity Officer for NBCUniversal.

With Anand Kini transitioning to SpinCo, we will commence a search of internal and external candidates for a new Chief Financial Officer.  

The Path Forward

Our effort to launch SpinCo as a successful public company will be done well versus done quickly. We have begun standing up a process and dedicated resources to ensure that we identify all that needs to be done and that it is done carefully and thoughtfully, without impacting the critical work everyone is doing to drive our priorities and businesses forward. I have asked Anand Kini and Adam Miller to project manage this transition in addition to their regular responsibilities, starting immediately through the completion of the transaction. 

In the weeks and months ahead, alongside your managers, we will do our best to keep you informed of meaningful updates. More information about SpinCo will be available on NBCUNow and on a new internal resource page that will be available later today.

In the interim, the most important thing everyone can do is remain focused on the work at hand to propel our continued success, so when the moment comes to launch SpinCo, both NBCUniversal and SpinCo have the same momentum we carry into this moment.

I want to thank everyone who has worked on this project so far and in advance for the work that will be required over the next year.

I believe the effort will be well worthwhile, as this project will inject energy and renewed focus in both the new company and the future NBCUniversal. When you combine our assets, talented management team, and balance sheet strength, we are uniquely positioned to set both SpinCo and NBCUniversal up to play offense in a complex and evolving media landscape.

Mike Cavanagh,
President, Comcast Corporation

— CNBC's Julia Boorstin contributed to this article.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.