NBCU's Smarter Plan: Shutting Down, Not Just Spinning Off

Many media companies are dealing with "zombie" cable networks – channels that barely show original content and mainly repeat old favorites. These networks often struggle to keep up with the changing landscape of streaming. NBCUniversal (NBCU) took a different path by shutting down several underperforming cable networks over the years. This decision was made because there were simply too many channels, and getting rid of unpopular ones made more sense than keeping them running with low viewership. NBCU has consistently looked at what’s best for their bottom line, unlike other companies that have kept underperforming networks running, which has led to significant write-downs for companies like Warner Bros. Discovery ($9. 1 billion) and Paramount Global ($5. 98 billion). NBCU hasn't disclosed any write-downs yet, showing their strategy has been effective in avoiding major losses. In 2021, NBCU closed down NBCSN, a sports network, believing that its broadcasts would be more beneficial on their broadcast network, USA cable channel, and Peacock streaming service. Now, Comcast, NBCU's parent company, is considering spinning off its cable networks. This decision could benefit shareholders, as it would separate NBCU’s streaming service Peacock and sports properties from the struggling economics of cable. Cable networks can be complex and costly to maintain, given their need for constant investment in new content to keep viewership numbers up. However, viewership has been shifting to streaming services. Disney’s FX, for instance, used to be known for its signature dramas and edgy series, but now it’s more associated with its parent company’s streaming service, Hulu. NBCU's current cable properties aren't all performing well. Universal Kids, for instance, hasn’t met the heights the company hoped for after acquiring DreamWorks Animation in 2016. Oxygen, once a network designed for female audiences by influential figures like Geraldine Laybourne and Oprah Winfrey, has become a typical true-crime channel where competitors have a stronger hold. Despite these issues, some networks like MSNBC and CNBC have loyal followings, and USA still attracts significant crowds with its sports programming and the return of WWE SmackDown. Bravo, too, has a dedicated fan base for its "Real Housewives" franchise. Comcast is exploring if they can avoid pitfalls faced by Disney. Disney recently agreed in carriage negotiations to make Disney+ and ESPN+ available to more subscribers while allowing distributors to drop low-performing cable channels. Spinning off cable networks would present challenges for NBCU, such as figuring out how news operations would fare if MSNBC and CNBC were separated from NBC News' newsgathering resources. Additionally, NBCU would need to ensure that cable and satellite operators are on board with continuing to show certain sports on USA. NBCU's foresight and strategic moves offer chances to maximize benefits from cable even as market conditions change. Comcast and NBCU can take their time to evaluate their options, as they aren't burdened by the same losses as competitors.