Comcast Corporation has announced its intention to separate into two independent publicly traded companies through a tax-free spin-off of NBCUniversal and Sky. Upon completion of the transaction, Comcast shareholders will own shares in both Comcast and NBCUniversal, creating two focused industry players, each with distinct strategic opportunities.

Comcast says the proposed separation reflects its track record of “positioning its businesses to compete and win in rapidly changing markets”. As technological innovation, consumer behaviour and competitive dynamics continue to reshape both media and communications, Comcast’s Board and management team believe each company will be better positioned to pursue its own strategic priorities, invest for growth and create long-term shareholder value as independent entities.

Brian L. Roberts will continue to be actively involved in the leadership of Comcast and NBCUniversal, working in partnership with the CEOs of both companies. Mike Cavanagh will be the Chief Executive Officer of NBCUniversal and Comcast’s former Chief Financial Officer Michael Angelakis will become the Chief Executive Officer of Comcast, following completion of the separation and in the interim will join as a Strategic Advisor.

Roberts commented: “This is a very exciting day for our company. The transaction we are announcing will unlock a more entrepreneurial management approach and open up a multitude of new opportunities for each business. I very much look forward to helping guide our collective growth for this next chapter.”

“Mike Cavanagh will lead the new NBCUniversal media and entertainment company as CEO. Mike is one of the finest executives I’ve ever worked with and a trusted partner. His vision is for a unique, independent, focused company that will be home to some of the industry’s most valuable brands and assets across theme parks, film, television, streaming, sports and news. This new company will be well-positioned to pursue the significant opportunities that lie ahead, to partner across the media and entertainment ecosystem, and will be poised to grow.”

“I am also incredibly pleased to welcome back Michael Angelakis as Comcast CEO. As our widely admired former CFO, Michael’s deep knowledge of the business and passion for technology – combined with the leadership of Steve Croney, Jason Armstrong and the entire Comcast management team – will serve us well as we continue to take bold actions in today’s competitive environment. Our recent momentum is the launchpad to propel our advanced network, substantial customer base, and outstanding products to even greater success. Michael’s drive, proven track record and the tremendous level of respect he commands within our organization and beyond, make me exceptionally excited to work closely with him again,” concluded Roberts.

Cavanagh said: “Both companies begin this next chapter from positions of strength. Comcast will continue to build on its leadership in connectivity, while NBCUniversal, together with Sky, will have the scale, brands, content and financial resources to compete as a premier global media and entertainment company. Each organization will continue to be led by a management team with deep industry experience that will benefit from focused strategic priorities and the ability to pursue opportunities most relevant to their businesses. I’m personally thrilled to continue leading NBCUniversal into the future. With our iconic brands and theme parks, leading franchises and incredible creative talent, we are well-positioned for long-term value creation.”

Angelakis added: “I have had the privilege of working alongside Comcast’s talented leadership team for many years, and I am excited to return to partner with Brian, Steve, Jason and the entire organization. Comcast’s exceptional assets, entrepreneurial roots, deep customer relationships and strong track record of innovation and technological leadership provide a powerful foundation for the future. Together, we will build on those strengths, execute aggressively, invest for growth, and pursue new opportunities to create value for our customers, colleagues and shareholders.”

Sky CEO, Dana Strong, commented: Comcast’s announcement marks an exciting new chapter for Sky. The plan to create two independent businesses, one focused on technology and one on media and entertainment, will see Sky become part of an independent, publicly traded NBCUniversal. It’s a natural fit, bringing together exceptional brands, creative talent and global scale. We’ve already seen what’s possible through our close collaboration, from Day of the Jackal to Saturday Night Live UK. Together, we’ll have even greater opportunity to create global hits and continue investing in world‑class storytelling, sport and customer experiences.

“This is just the start of the process, but it builds on real momentum at Sky: from our growing slate of Originals, to record sports audiences, the innovation and value we bring our customers, and news which informs millions of viewers about events taking place around the world, and important developments here at home. We are in a strong position and I have great confidence that we can, and will, continue to build on our progress,” she concluded.

Transaction Details

The separation is expected to be completed through a tax-free spin-off to Comcast shareholders in approximately one year, subject to the satisfaction of customary conditions, including final approval by Comcast’s Board of Directors, receipt of tax opinions, regulatory approvals and completion of financing arrangements. NBCUniversal will have the same dual-class share structure as Comcast. Comcast expects to retain a stake of up to 19.9 per cent ownership position in NBCUniversal for up to one year after the completion of the spin, which it intends to monetise in a tax-efficient manner over time.

Comcast intends to establish a strong investment grade balance sheet for each business, providing Comcast and NBCUniversal with significant financial flexibility to pursue their respective growth strategies.

Reaction

Reacting to the news, Paolo Pescatore of PP Foresight said (via LinkedIn): “For Comcast, this is about focus. For NBCUniversal and Sky, it is about freedom. And for the wider sector, it is another reminder that transformation across telecoms, media and technology is only accelerating.”

According to Dan Larkman, CEO and founder of Keynes, Comcast’s move is another sign that the industry is still working out how content and distribution fit as separate businesses, and what that’s actually worth.

“All of these companies are trying to figure out how to price it, what works, and what they should specialise in. And they’re not just competing with each other. They’re up against Netflix, Amazon, Apple, and Google. There’s a lot of money flying around, and nobody’s fully figured it out yet,” Larkman said. “Disney’s a good example. A few years ago there were rumors they were going to sell ESPN. They had put very little into the ESPN app and hadn’t really bundled it the same way. Then all of a sudden ESPN is buying a stake in NFL media and charging a premium for the ESPN package again. That’s the environment we’re in. Some of these businesses are going to come out of this in a strong position. Some aren’t. You don’t want to be holding onto an anchor.”

“The way content is distributed and sold is changing fast. A ton of it is being sold upfront, a ton is being sold programmatically, and that means you don’t need the big sales teams and infrastructure you’ve always had. I don’t think this is the last time we see this. We’re going to keep seeing companies separate pieces of the business as they work out where they should be and what they should specialise in,” he concluded.