Cable Companies Could Find New Life On Their Own

Comcast’s potential plan to spin off its cable channels into a separate, “well-capitalized” company is sending positive shockwaves to Wall Street that could reshape the business next year.

The Big Picture: Streaming killed the cable star as consumers cut the cord and went a la carte with their entertainment offerings. But, economically, cable has been a good business… so media conglomerates are hoping to hold onto it as long as possible in a way that doesn’t drag down their overall business.

Between The Lines: THR reports that Comcast president Michael Cavanagh was vibe-checking Wall Street with its idea of spinning off its cable business. Turns out, the vibes are immaculate.

• Not only did Comcast’s shares pop 4%, but Warner Bros. Discovery, Paramount, and Disney all enjoyed gains at the thought of following Comcast’s lead.
• The idea gained traction because a spinout may lead to a company that could become a rollup firm for several cable brands (imagine Comcast’s NBC, WBD’s TBS, and AMC Networks’ IFC in the same bundled company).
• The consolidation could lead to a few sizable, pure-play cable companies that are more flexible to make deals, look attractive to consumers, and aren’t chained to the growth narratives of conglomerates pursuing streaming success.

Closing Credits: The hypothetical cable-brand companies wouldn’t be without their issues — divorcing news networks is especially difficult, and how to actually value assets that are inevitably declining in subscribers and revenue is complicated. But working through the issues could keep cable brands alive longer as actual businesses… instead of just turning into labels for streamers.

Alternative Take: Despite toying with the idea, Disney is the only company that’s publicly stated — at least for now — that it won’t take that route.