Unlike its rivals, NBCUniversal long ago developed a healthy fear of zombies.
Not the shambling, undead kind that lurch around trying to eat brains, but rather the media variety: “Undead” cable networks that long ago gave up all hopes of cultivating audiences around the clock and instead run only a few hours of original programming, coupled with seemingly endless repeats of TV favorites, like “Ridiculousness” (MTV); “Fear Factor” (HLN); or “Seinfeld” (Comedy Central).
Paramount Global and Warner Bros. Discovery, two of the bigger owners of these cable-network wraiths, haven’t had much to show for keeping them up and running. Indeed, Warner in August unveiled a massive $9.1 billion write-down of its TV assets, citing business headwinds as well as the projected loss of its lucrative agreement with the NBA to show games on its cable networks. Paramount Global followed suit, revealing a $5.98 billion impairment charge as it prepared for its acquisition by Skydance Media.
NBCU hasn’t disclosed a write-down yet, and one reason why is that the company has for years been shutting down underperforming cable networks with little sentimental attachment to them. “There are just too many channels,” said Steve Burke, the former NBCU CEO in 2016, after the company had scuttled Style and G4. Also gone: Esquire, Cloo and Chiller. In 2021, NBCU raised eyebrows by announcing plans to close NBCSN — a sports network! The theory: sports broadcasts would bolster the NBC broadcast network, the USA cable channel and the Peacock streaming service (Narrator: “They have.”)
Now, Comcast, NBCU’s parent, will consider a possible spin off of its cable portfolio, the company disclosed Thursday during a call with investors. The idea, said Comcast president Mike Cavanagh, is to analyze what the effects of such a transaction might be before coming to a decision. “‘There may be some smart things to do and we want to study that,” he said. The news almost immediately spurred speculation that Warner Bros. Discovery or Skydance might want to acquire such assets, though Cavanagh emphasized the intent — if a decision is reached — would be to give the new company to shareholders.
“Investors have yearned for exactly this, or at least something close to it, for years,” said Craig Moffett, an analyst with MoffettNathanson. A deal such as this would uncouple Peacock and NBCU’s sports properties from the eroding economics of cable.
It’s no secret that stand-alone cable networks have become complex but toxic assets in the modern media lineup. They continue to generate millions in advertising and distribution revenue, but they require millions in content spend to keep up their ratings at the exact moment that many of their viewers are moving to streaming services. Disney’s FX, for example, was long known for offering signature dramas and edgy series, which it doled out one episode a week at specific times of the year that often synced up with the needs of its producers. Now, most people think of “The Bear,” a current FX favorite, as something more tied to Hulu, the streaming service owned by parent Walt Disney Co.
NBCU’s current cable properties aren’t all running full steam ahead. The Universal Kids network has never scaled the heights the company planned when it acquired DreamWorks Animation for $3.89 billion. Indeed, NBCU might have been better off keeping the outlet under its previous moniker, Sprout, when it was designed to appeal to preschoolers and their parents. Oxygen, once a network backed by Geraldine Laybourne and Oprah Winfrey and created to appeal to female audiences, is more or less a cookie-cutter true-crime outlet in which rivals have a stronger perch.
But there are still some good businesses to be found. MSNBC and CNBC have die-hard audiences, and USA, though no longer known as the home for “blue-sky” dramas such as “Burn Notice” or “White Collar,” still brings in sizable crowds with sports and the return of “WWE SmackDown.” Bravo has cultivated a die-hard fan club of people who want to scoop up every detail of whatever edition of “Real Housewives” is on the schedule.
Comcast may be wondering if it can avoid some of the challenges that have been faced by Disney. Charter Communications gained notice for its more recent carriage negotiations with the company, in which Disney agreed to make Disney + and ESPN+ available to some of its distributor’s subscribers, while giving Charter the leeway to drop cable properties such as Freeform, Disney Junior and Disney XD.
Spinning off cable would raise some pretty thorny issues. Could NBCU’s news operations still thrive if MSNBC and CNBC were split off from the newsgathering apparatus of NBC News? Doesn’t cable revenue provide valuable dollars for actual reporting? And do cable and satellite operators have any deals in place that guarantee a certain amount of sports continue to show on USA?
Cable has cut the value of Paramount and Warner. NBCUniversal might still be able to wring some new benefit from the medium if executives play their hand appropriately. Comcast and NBCUniversal have the luxury of being able to scrutinize such stuff, because, unlike their competitors, they didn’t whistle past the graveyard.
