After several difficult hosting events due to the coronavirus and a less-than-optimal host city, last summer’s Paris Olympics flourished with increased viewership and advertising records.
With even more pleasing results expected at the 2026 Italian Winter Games and 2028 Los Angeles Summer Games, NBCUniversal may need to develop some new muscles to maintain synergistic momentum. No. Parent company Comcast plans to spin off NBCU’s cable network as a separate, publicly traded company next year. The deal, which was officially announced early Wednesday, is expected to take a year to complete.
Although the deal was revealed just three weeks after executives announced it on an earnings call, a generous timetable for completion is in place to allow for continuation. In an internal memo, Comcast President Mike Kavanaugh urged employees to “remain focused on the work at hand to drive continued success.”
BofA Securities estimates that about 75% of the new company’s portfolio will be news and sports programming. MSNBC staffers are digesting the news that they will need to find new ways to integrate NBC News resources going forward. So did CNBC, where anchors on Squawk Box on Wednesday morning loudly questioned their station’s economic outlook. Some have suggested that the solution to the news problem may lie in reaching a licensing deal to maintain NBC News’ presence (and justify the MSNBC name). Given the amount of content shown on networks like USA and Golf Channel, it’s likely to happen in sports in some form as well.
NBC Sports President Rick Cordella, speaking at a Sports Business Journal conference Wednesday morning, called the spinoff “a microcosm of a larger industry” facing many challenges. Amid the restructuring, he said NBCU and a new independent corporation called SpinCo will “fulfill all obligations” to its partners, including the PGA, NASCAR and WNBA. The U.S. also controls a significant portion of “sports-adjacent” real estate, with WWE Smackdown returning to the network in a multi-year rights deal earlier this year.
Some significant leadership changes are planned and will impact sporting strategy. SpinCo’s new CEO is Mark Lazarus, a longtime veteran with deep roots and connections in the world of sports media. Matt Strauss will become chairman of NBCUniversal Media Group, where he will continue to oversee streaming platforms such as Peacock, international networks and global streaming, as well as NBC Sports, ad sales and many other business areas. (Donna Langley also received a major promotion in the entertainment shuffle, with a series of adjustments underway ahead of the spin.)
Although Wall Street took an overall benign view of the cable operation, BofA Securities analyst Jessica Lief Ehrlich had a positive reaction, saying Lazarus and current NBCU CFO SpinCo. He cited Anand Kini, who will become CFO. “These two highly experienced and leading management members at Comcast/NBCU bode well for the newly formed company,” she wrote in a note to clients.
Rob Rosenberg, former EVP and general counsel at Showtime Networks, told Deadline that he expects the need for consistency to outweigh concerns about licensing costs. But when it comes to the Olympics, he said it’s not such an obvious decision.
“NBC may be offering Olympic coverage on its own cable network as a way to prop up the network, but Comcast could make even more money by continuing to broadcast the Olympics on NBC. No,” he said. “If the cable networks still want that content, they’re going to need some kind of internal licensing, from left to right, to continue to provide those rights to the cable networks. They may also choose to block that content for their network.”
Cordella said Strauss, who was Peacock’s original architect in 2020, is “bullish” on sports as a subscriber acquisition tool, a goal that is no longer clear among cable programmers. he pointed out. The trend of cord-cutting, especially if, as widely expected, more networks are to join, is draining network assets despite wasting enough cash to keep the business afloat. This means that it is decreasing over time. (A Venu Sports-style multi-company service designed for linear TV would be much less difficult than for streaming.)
Strauss supported the idea of putting the Premier League and WWE on Peacock early on, but this decision led to major shakeups like the Olympics and the NFL. When it’s successful, viewers who are captivated by a sport tend to stick with it, streaming players conclude. (Witness Netflix’s recent entry into the sports rights game.)
“Sports fans aren’t as monolithic as just watching sports,” Cordella said.
