Before NBCU Considered Spinning Off Cable Networks, It Shut Many Down

As someone who has spent countless hours flipping through channels and witnessing the slow decay of cable networks, I can wholeheartedly empathize with NBCUniversal’s strategic approach towards this undead media landscape. It’s like watching a zombie apocalypse unfold on your screen, only instead of the shambling, brain-eating kind, we have cable networks that shuffle around with repeats of “Ridiculousness” and “Seinfeld.

Unlike its rivals, NBCUniversal long ago developed a healthy fear of zombies.

Instead of the grotesque, brain-eating type of undead, I’m referring to the media form: “Undead” cable channels that abandoned all attempts at maintaining 24/7 audiences long ago and now primarily air a few hours of original content, interspersed with endless re-runs of popular shows like “Ridiculousness” (MTV), “Fear Factor” (HLN), or “Seinfeld” (Comedy Central).

Two major television network giants, Paramount Global and Warner Bros. Discovery, have struggled to generate significant returns from their cable network holdings. In fact, Warner Bros. announced a staggering $9.1 billion reduction in the value of its TV assets due to challenging market conditions and the impending loss of its NBA game broadcast deal on cable networks. Not far behind, Paramount Global declared an impairment charge of $5.98 billion as part of its upcoming merger with Skydance Media.

As a seasoned movie critic, I’ve observed that Comcast-NBCUniversal (NBCU) has been strategically pruning its underperforming cable networks for quite some time now, without much remorse. Back in 2016, Steve Burke, the then CEO of NBCU, candidly admitted, “There are just too many channels.” Following this admission, Style and G4 were among the first casualties, with Esquire, Cloo, and Chiller not far behind. Fast forward to 2021, NBCU caused a stir by announcing its intention to close NBCSN – yes, you read that right, a sports network! The rationale behind this move: strengthening the NBC broadcast network, USA cable channel, and the Peacock streaming service (and indeed, they have).

I, as a Comcast supporter, am excited to share that Comcast, being the parent company of NBCU, is mulling over the possibility of spinning off its cable portfolio. This was disclosed during a call with investors on Thursday. According to Mike Cavanagh, Comcast’s president, they are examining the potential implications of such a move before making a decision. In his words, “There may be some smart things to do, and we want to study that.” The announcement has sparked speculation about potential suitors like Warner Bros. Discovery or Skydance, but Cavanagh clarified that if a decision is reached, the intention would be to distribute the new company to our shareholders.

For a long time, investors have been hoping for something like this or very similar to it,” noted Craig Moffett, an analyst at MoffettNathanson. Such a deal would separate Peacock and NBCUniversal’s sports assets from the declining financial state of cable television.

As a film enthusiast, I can’t help but notice the shifting landscape of modern media. Once standalone cable networks were the crown jewels, bringing in massive ad and distribution revenues. Yet, these days, they’ve become somewhat problematic assets, demanding hefty investments in content to maintain their ratings, all while viewers are gradually migrating towards streaming platforms.

The current NBCU cable channels aren’t all performing as well as expected. For instance, the Universal Kids network, which NBCU acquired as part of the $3.89 billion deal with DreamWorks Animation, hasn’t reached the heights they had hoped for. In fact, some argue that NBCU might have been better off keeping it under its original name, Sprout, since it was aimed at preschoolers and their parents. Oxygen, once a network with backing from Geraldine Laybourne and Oprah Winfrey and designed to cater to female audiences, has mostly become a generic true-crime channel where competitors hold a stronger position.

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 might be considering ways to sidestep the difficulties that Disney has encountered. Notably, Charter Communications attracted attention during their recent contract negotiations with Disney, where Disney agreed to provide Disney+ and ESPN+ access to some of Charter’s subscribers, while also allowing Charter the flexibility to remove cable channels like Freeform, Disney Junior, and Disney XD from their offerings.

Separating NBCU’s news channels, such as MSNBC and CNBC, from the news-gathering operations of NBC News could potentially pose complex challenges. Would these standalone channels maintain their journalistic prowess? Is cable revenue crucial for funding news reporting? Also, are there any agreements between cable/satellite providers that ensure sports programming on USA remains intact?

The disruption caused by cable has impacted the values of Paramount and Warner. NBCUniversal may find additional advantages from this medium if they strategically manage their assets. Unlike other companies, Comcast and NBCUniversal have the advantage of carefully examining these situations because they didn’t ignore potential issues, as some of their competitors might have done.

2024-10-31 21:17

Before NBCU Considered Spinning Off Cable Networks, It Shut Many Down

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