The media/business nexus is still buzzing from the musings expressed this week by a fairly prominent leader on what was expected to be a victory lap. BLOOMBERG’s Kelcee Griffis was among the many who offered some basic details in stories dropped yesterday:
Comcast Corp. said it’s considering spinning off its cable networks into a new company as it grapples with the continuing industry-wide decline in subscribers.
“We’re going to commence a study of whether there’s a good idea in creating a new, well-capitalized company that would go to our shareholders — existing shareholders — comprised of our cable portfolio networks,” President Mike Cavanagh said on a call with analysts to discuss earnings. “We’re not talking about Peacock or broadcast networks.”
“In a moment of a lot of transition in the industries we’re a part of, I think we’ve got a very strong hand,” Cavanagh said. “I think the idea of playing some offense when you combine the balance sheet strength that we have, the assets we have, and the management team we have, there may be some smart things to do, and we want to study that.”
But as THE NEW YORK TIMES’ Benjamin Mullin reported Thursday, this was as much an apology as it was a declaration, since this is apparently an offense that’s more in the neighborhood of, say, the New York Giants than Comcast’s beloved Philadelphia Eagles:
He spoke after Comcast reported a 3.3 percent decrease in net income last quarter, even as revenue increased 6.5 percent, to $32 billion. The company reported losses of 87,000 U.S. customers for its broadband services compared with the same period last year, and cable TV subscribers continued to decrease.
And as Griffis further elaborated, those buzzkill-ish numbers came amidst some fairly robust results for what was one of this year’s few reminders that mass audiences will still find their ways to traditional media when there’s something they actually want to watch:
Comcast reported third-quarter sales and profit that exceeded analysts’ expectations after the company’s NBCUniversal division got a lift from the Summer Olympics, an event that generated $1.4 billion in advertising revenue.
The Paris Games delivered a ratings bonanza for NBC after less-viewed stops in Tokyo and Rio de Janeiro. The opening ceremony drew over 28.6 million viewers, the largest audience since London in 2012. NBC also bet big on young influencers to draw fresh audiences and reignite Americans’ interest in the Olympics.
Comcast’s Peacock service, which exclusively streamed the Olympics, signed up 3 million new customers in the quarter, bringing its total to 36 million. It also benefitted from an exclusive NFL game played in Brazil. But the unit is still losing money, including $436 million in the third quarter, though that was less than Wall Street predicted.
And those were the success stories. What you don’t see there are any of the names of the myriad entities that have already begun their inexorable decline. USA. MSNBC. Bravo. E!. Syfy, which may yet figure out how to use Spellcheck. A quick look at how they fared in 2023 shows with the exception of MSNBC all of these networks suffered year/year declines in average overall audience. Among adults under 50, all but USA (flat) were down even more significantly–even Bravo, with all of the relative buzzy iterations of REAL HOUSEWIVES as catnip, was down double-digits. And none of these networks were number one even in their respective niches.
Cavanagh seemed to achieve some short-term goodwill on his part, as THE HOLLYWOOD REPORTER’s Alex Weprin observed yesterday morning:
Was Comcast testing the waters? Sure. Comcast president Mike Cavanagh made it clear that the company was just beginning to look into the idea, and was far from making a formal decision.
But one thing became clear: Wall Street seemed to like it. Comcast shares surged when the market opened, and closed up 4 percent on an otherwise down day for Wall Street. And Comcast’s news seemed to make waves across the entire industry, with Warner Bros. Discovery shares also surging, and Disney and Paramount also inching up. In fact, on a day when almost the entire market was down, the media and telecom segments were up.
There are some informed observers who are a tad bullish on the prospects of doing a slightly better job as Weprin also reported:
The biggest surprise is Comcast beat WBD to the punch, although we believe a spinout could be a cable network consolidator (our view is this will ultimately happen for the industry),” she wrote in an analyst note Nov. 1.
Indeed, Reif Ehrlich told The Hollywood Reporter in an interview after WBD’s disastrous Q2 earnings that a roll up of cable channels would provide ample opportunities.
“Somebody will separate their linear assets, and somebody will roll them up,” Reif Ehrlich said at the time. “We have all these — call them stranded cable networks — maybe part of bigger companies, but not an area of investment, not an area of growth. And so if you combine a lot of the cable networks, I think you get rid of corporate overhead. You can get rid of duplicative advertising functions, distribution, there’s a lot of costs by combining. A roll up could be run for cash.”
Perhaps. It’s pretty clear that there’s scant little love within Comcast for these brands. Original scripted programming is virtually non-existent, and even unscripted development has diminished greatly over where it was even a few years ago. You don’t see those logos on any of Comcast’s real estate, even the ones outside Philadelphia. Maybe someone else with a tad more passion and relative dedication could show them a little more love. Weprin rattled off a few possibilties:
(T)here remain independent cable-centric companies, attempting to navigate the waters as best they can, who may find joining with a larger firm benefits them. AMC Networks, which owns AMC, IFC and BBC America is one, A+E Networks (jointly owned by Disney and Hearst) is another, with A&E, History and Lifetime among its brands. Hallmark Channel, owned by the greeting card giant, is also a major independent player.
But there’s anything but wild growth being seen at any of these companies, and the main reason they remain as committed to their legacy strategies as they do is their inability to make even a dent with their own streaming strategies, and what successful content they do have has been seen by far more people on entitles like Netflix and Peacock–which is also true for the Comcast content. You do remember SUITS was a USA original long before it was true cultural zeitgeist, no?
And if one looks at the current schedules of these networks one can’t help but notice that they more resemble those of FAST channels. USA Network now fills dozens of hours a week with blocks of reruns of Dick Wolf’s respective LAW AND ORDER and ONE CHICAGO franchises–shows that are also readily available on Peacock and even ION. And Bravo and E! have been running blocks of repeats of their originals to round out schedules for more than a decade, a strategy I was forced to take a close look at when one of its disciples became my boss and was looking to throw her considerable weight around. Let’s tactfully say it didn’t translate well then when actual ratings and revenue were scrutinized and is doing far less well now.
VARIETY’s Brian Steinberg raised the possibility that the timing of this, a day before Dia de los Muertes, may have been ominous, given the history of how Comcast has previously dealt with underwhelming brands:
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).
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!
So there’s always the possibility that those underappreciated networks now emulating the “strategies” that Steinberg enumerated might just cease to exist. Heck, even the Kardashians have found their way elsewhere, and they all but kept E! in existence amidst several previous rumblings that it was on the chopping block. Can you quickly name anything that actually still produces new episodes that debut there of a show that YOU watch? If so, you’re a better person that I, Gunga Din (a reference I acknowledge may be as outdated as cable networks themselves).
But perhaps more sobering might be the acknowledgment of who might actually want to invest in this sort of distressed real estate. Look at what has already happened in the print media sector, which lately is something that can’t be avoided. Particularly when arguably your top performer is something like MSNBC, there’s no doubt a list of folks that would be kicking tires to figure out a way to muzzle or reimagine it. And hey, one such tire kicker just happens to employ someone who used to make a ton of money selling it.
Don’t say I didn’t warn you. Caveat emptor. And venditor emptor, too.
Until next time…