While there are many lingering questions about the implications of Comcast’s announcement that it will spin off its cable network portfolio into a publicly-traded company, its unlikely that the move to create SpinCo will warrant a review by the Federal Communications Commission, New Street Research analyst Blair Levin said Wednesday.
“As the spin-off does not involve any transfer of FCC licenses, there is no FCC review,” Levin wrote in a research note to clients. He also pointed out that there shouldn’t be any antitrust issues, given that the move does not involve any combination that would “increase horizontal or vertical concentration.”
But he warned the “X factor” is whether Donald Trump, who recently won a second term in the White House, would ask any government officials to “slow-down or otherwise interfere with the transaction, which involves MSNBC—a major Trump nemesis—until Trump receives some sort of concession for how MSNBC covers news in the future.”
“We continue to believe that the Trump Administration cannot cause material problems with the spin-off. We acknowledge that we must be far more creative than in the past in contemplating the different scenarios by which Trump may exercise executive power in his effort to motivate other media outlets to be more accommodating,” Levin continued. “Still, the legal rationale for any interference in a spin-off is either non-existent or very weak. We think the Trump Administration will choose other vehicles to motivate compliance with Trump’s concerns about news coverage.”
Trump has selected Brendan Carr, the author of the Federal Communications Commission section in Project 2025 and the senior Republican on the FCC, to serve as the agency’s new chairman.
Levin expects a Carr-led FCC to revise current broadcast ownership rules that enable more local and potentially national consolidation, which will create new opportunities for Comcast and NBCUniversal to participate in with its spin-off.
“We have no insight into Comcast/NBC’s plans but simply note that there will be buying and selling opportunities as affiliate groups, such as Nexstar and Sinclair seek to achieve more productive footprints,” he said.
However, Carr recently suggested that Trump’s complaints that ABC, NBC and CBS should lose their licenses on public interest grounds related to news coverage during the campaign would be considered in transactions involving license transfers, specifically citing Trump’s recent complaint against “60 Minutes” and Paramount’s transaction with Skydance Media.
“We think the intent is not to block a deal or take away licenses but to motivate the news coverage to be more favorable to Trump, something that if successful could, ironically, create more competition for Fox News,” Levin said.
At the same time, Elon Musk has expressed support for broadcasters returning their spectrum licenses for auction, while Health and Human Services secretary nominee Robert F. Kennedy Jr. has called for a return to policy that would prohibit direct to consumer drug advertising – an important source of revenues for broadcasters.
“While we don’t think either proposal will come to pass, they add risks to any broadcaster related transaction,” Levin said. “The [spin-off] removes an obstacle (MSNBC) to approvals for other deals that Comcast/NBCU may wish to do that require government approval, but that may not be enough.”
SpinCo will house MSNBC, CNBC, USA, Oxygen, E!, Syfy and Golf Channel, as well as digital assets Fandango, Rotten Tomatoes, Golf Now and Sports Engine. It will reach approximately 70 million households. The cable network portfolio generated about $7 billion in revenue for the 12-month period ending Sept. 30.
The move will be structured as a tax-free spinoff to Comcast shareholders that will take around a year to complete, subject to final approval from Comcast’s board, completion of “SpinCo” financing and receipt of tax opinions and any regulatory approvals, which would likely have to come from the U.S. Securities and Exchange Commission.
The venture will have a dual class share structure that will see Roberts hold a one-third voting stake, though he will not be on the spun-off entity’s board, an individual familiar with the matter previously told TheWrap.
In addition to housing Comcast and NBCU’s cable networks, Wall Street analysts and industry executives have previously told TheWrap that SpinCo could provide an opportunity to create a roll-up vehicle for other distressed linear TV assets from competitors like Paramount or Warner Bros. Discovery.
WBD CEO David Zaslav has long-called for media consolidation and recently said the Trump administration “may offer a pace of change and an opportunity for consolidation that may be quite different, that would provide a real positive and accelerated impact on this industry that’s needed.”
While former Comcast Cable president and CNBC founder Tom Rogers previously told TheWrap he expects Paramount and WBD to spin off their networks into SpinCo in the future, he acknowledged that “at some point you reach antitrust issues as to how big that bundle of channels can be and the leverage that it would have relative to cable customers going forward, and the outcome of that depends on who’s running the [U.S.] antitrust department.”
When asked about the spinoff, Fox CEO Lachlan Murdoch notably shot down the idea, telling analysts that a break-up would be difficult from both cost and promotional point of views and that its cable network drives a tremendous amount of synergy across all of our platforms,” which include Fox News, the entertainment arm of the company, Fox Sports and Tubi.
“While we agree in general, we have our doubts about any deal that involves creating a common owner for both CNN and MSNBC,” Levin added. “Here, however, a spin-off of one or more channels might address the Trump concern, particularly if the spin-off resulted in a Trump friendly entity controlling the channel. Again, this could create more competition for Fox News.”
