Brian Roberts’ surprise plans to spin off NBCUniversal from Comcast have set the stage for an M&A bonanza, with bankers working overtime to concoct deals where the media mogul is both a buyer and a seller of some of the industry’s biggest assets, On The Money has learned.
Just a few months ago when the battle for Warner Bros. Discovery was raging, the Comcast chief was considered an also-ran. Comcast’s floundering stock price (shares down 55% over the past five years) was no match for Ted Sarandos at Netflix, or the deal’s eventual winner, Paramount Skydance, backed by indie producer David Ellison and his mega billionaire father Larry Ellison.
All of that changed this week when Roberts announced that Comcast is spinning off what’s left of its news and entertainment assets in NBCU and Sky (recall, he already spun off cable assets like MS Now and CNBC into a company called Versant) while keeping his cash cow, the Comcast cable business.
Roberts will retain voting control of all three companies, and now finds himself in the catbird’s seat, bankers and media executives tell On The Money. Common sense will tell you that having three separate and slimmed down companies make it easier to buy stuff and to sell stuff; investors love the NBCU spinoff because distribution and content (the old Comcast business model) no longer appears to be a winning formula. Hence this week’s pop in Comcast shares, which will be the currency Roberts might soon use for an acquisition.
Literally the minute the news hit the tape, one media M&A lawyer told me he thinks Roberts will add heft to Comcast’s distribution business, which generates big bucks – albeit a lot less of them than it used to because of cord cutting and encroachment from mobile carriers. Roberts will spin off NBCU at some point, he told me.
“I can see him buying Charter Communications and selling NBCU to Netflix,” the veteran deal lawyer tells me.
The theory goes that Charter would bolster Comcast’s cable business and through Spectrum Mobile, the combined company can better compete with the Big 3 of wireless: Verizon, AT&T and T-Mobile.
Netflix, meanwhile, has seen better days, which means it needs to do something. After losing the WBD bidding war, its stock recovered on the notion it doesn’t have to spend tens of billions of dollars on a risky asset, only to begin another downward trajectory as investors now worry its content-focused model won’t stand the test of time.
Bankers believe Sarandos will need NBCU to survive competition in streaming, along the lines of his proposed bet on WBD: A real studio, news, sports (which still generates big bucks) and entertainment (think “Saturday Night Live”), and the Peacock streaming service.
Roberts this week tried to throw cold water on deal talk. “Absolutely not,” was his answer to a question raising the possibility of various deals.
At least one media banker told me he believes the Comcast chief will keep his powder dry for a while, focus on the NBCU spinout (scheduled for completion in mid-2027) and “ride cash flow at a 5-times multiple,” meaning the extra cash generated from the cable business that supported NBCU (streaming and studios and TV are expensive) will be plowed into a company where the stock is trading pretty cheap.
After that, all bets are off, and it’s when “they will use the newly spun currency to bulk up through M&A.”
