NBCUniversal & Comcast Split into 2 Companies

[Brian G.]

This is more of a corporate restructuring than anything to help streamline priorities and separate the financials, including the debt. I’d pump the brakes on some of the speculation.

 

[PerceptiveCoot]

We'll see what Matt Belloni says this week.

 

[rageofthegods]

This is why Wall Street has also finally come around on the parks business after years of overleveraging them to fund other businesses. They provide predictable annual revenue, expansion operates in fairly obvious ways, and the mechanisms for success are less opaque and more broadly applicable than the mechanisms behind what makes good entertainment.

I will say Universal has largely been fiscally responsible with their film business, and haven't had the spate of bombs and failures that have plagued other companies like Disney, Warner, Paramount, Sony, etc. The bigger problem is going to be their debt load and the streaming service, each of which will exacerbate the issues with the other.

Yeah Universal film is arguably best in the biz in terms of consistency, even if they're not always the flashiest. Donna Langley is one of the best to do it.

My biggest worry is they're gonna have multiple huge fiscal priorities in the coming years (renew NFL/Olympics, expand and maintain parks, grow Peacock) and that's gonna be so much harder when they're an individual company with no cable channel money outside of Bravo vs when they're part of Kabletown.

 

[MAC]

Yeah Universal film is arguably best in the biz in terms of consistency, even if they're not always the flashiest. Donna Langley is one of the best to do it.

My biggest worry is they're gonna have multiple huge fiscal priorities in the coming years (renew NFL/Olympics, expand and maintain parks, grow Peacock) and that's gonna be so much harder when they're an individual company with no cable channel money outside of Bravo vs when they're part of Kabletown.

Didn't they spin off their cable business in the past year or so? So I don't think that would've influenced the spending one way or another as it's not a revenue stream any longer.

 

[Parkscope Joe]

Didn't they spin off their cable business in the past year or so? So I don't think that would've influenced the spending one way or another as it's not a revenue stream any longer.

Yes, Versant - Wikipedia

 

[PerceptiveCoot]

Didn't they spin off their cable business in the past year or so? So I don't think that would've influenced the spending one way or another as it's not a revenue stream any longer.

It won't be pulling them down but it won't be bringing them any cash flow either.

I imagine both Comcast and NBCU will continue to have investments in Versant from whatever existing arrangement exists between the two companies. Of note is that Versant stock currently trades higher than the combined stock value of Paramount + Warner.

 

[TheCodeMan95]

This is more of a corporate restructuring than anything to help streamline priorities and separate the financials, including the debt. I’d pump the brakes on some of the speculation.

Yeah - is there any indication that Comcast is actually looking to sell off NBCUniversal? lol

 

[PerceptiveCoot]

Yeah - is there any indication that Comcast is actually looking to sell off NBCUniversal? lol

They've said they won't, but that word's only so good. But yes, no indication as of yet.

 

[MAC]

This is more of a corporate restructuring than anything to help streamline priorities and separate the financials, including the debt. I’d pump the brakes on some of the speculation.

But NBCUniversal will be an independent company. Not a subsidiary. Comcast will own 20% of the stock for up to a year, but I assume after that, Comcast wouldn't have any say in the business of NBCUniversal. Or am I misunderstanding something?

 

[Brian G.]

But NBCUniversal will be an independent company. Not a subsidiary. Comcast will own 20% of the stock for up to a year, but I assume after that, Comcast wouldn't have any say in the business of NBCUniversal. Or am I misunderstanding something?

Yes, NBCU will be on its own.

My point was more that this announcement, by itself, isn't evidence that Universal is up for sale or that it's going to stop investing in the parks.

Could being independent make a future merger or acquisition easier? Sure. I just don't think we're anywhere near that convo just yet.

Personally, I think the spinoff may actually mean the opposite as far as acquisitions or investments, IMO. If the entertainment business ends up with its own, more focused balance sheet after the spinoff, that could give it more flexibility.... BUT we gotta see the final details, especially how the debt ends up being allocated between the two companies.

Basically, this makes NBCU look a lot more like Disney from a corporate structure standpoint. Instead of being part of a telecom company, it'd be a standalone entertainment company with movies, TV, streaming, and theme parks all under one roof.

 

[Mad Dog]

Yes, NBCU will be on its own.

My point was more that this announcement, by itself, isn't evidence that Universal is up for sale or that it's going to stop investing in the parks.

Could being independent make a future merger or acquisition easier? Sure. I just don't think we're anywhere near that convo just yet.

Personally, I think the spinoff may actually mean the opposite as far as acquisitions or investments, IMO. If the entertainment business ends up with its own, more focused balance sheet after the spinoff, that could give it more flexibility.... BUT we gotta see the final details, especially how the debt ends up being allocated between the two companies.

Basically, this makes NBCU look a lot more like Disney from a corporate structure standpoint. Instead of being part of a telecom company, it'd be a standalone entertainment company with movies, TV, streaming, and theme parks all under one roof.

Yeah, my reading on this also. Plus, though internet business is still decent, the cable end isn't, so this may end up being a plus for the park end of the business. The long term signals have basically shown that the theme park side is a significant company projected growth factor, so I'd expect the investments to continue. Times have changed since the pre Comcast ownership days. The TV networks aren't the leaders/drivers anymore. Now it's film production, theme parks, and a bit of streaming.

 

[TheCodeMan95]

Yeah, the theme parks are proven money makers at this point - so I can't imagine any entity would want to slow down on investment into the parks any time soon.

 

[Grabnar]

Personally, I think the spinoff may actually mean the opposite as far as acquisitions or investments, IMO. If the entertainment business ends up with its own, more focused balance sheet after the spinoff, that could give it more flexibility.... BUT we gotta see the final details, especially how the debt ends up being allocated between the two companies.

this is the real key and it won't play out for a few years. From a business standpoint it's a lot easier to get approval in the parks from a Parks and Entertainment focused CEO than from a telecom CEO. Those pockets are less deep, though.

Really could go either way.

 

[brianlo]

This is more of a corporate restructuring than anything to help streamline priorities and separate the financials, including the debt. I’d pump the brakes on some of the speculation.

This is not a corporate restructuring... It’s a split.

Of note is that Versant stock currently trades higher than the combined stock value of Paramount + Warner.

That’s not really how that works in any meaningful way. PSKY/WBD have a market cap of 70 billion. Versant 5B.

An individual stock price is just a function of how many shares are distributed versus the total company value. Versant has significantly less shares.

 

[Brian G.]

This is not a corporate restructuring... It’s a split.

I was just speaking broadly. I clarified my point later on. Whether you call it a split or a restructuring doesn't really change the point I was making.

 

[brianlo]

I was just speaking broadly. I clarified my point later on. Whether you call it a split or a restructuring doesn't really change the point I was making.

I know, but If the shoe were on the other foot and NBC Universal was being bought for the first time by Comcast, we wouldn’t label it as a corporate restructuring. It was would an acquisition, and a fairly prominent one at that.

This is a major gravitational change and a potential turning point. That doesn’t empirically imply it is all good or all bad, but it’s very major.

Their access to cash flow isn’t as dire as the days of yore, but it’s a big retrenchment. Debt will have to be taken on to expand at the clip they are going. Assuming another buyer is in fact not circling.

 

[Cup_Of_Coffee]

It’s not that they’d cancel current projects it’s more that they’d stop investments in the future to rake in money is my concern.

 

[nickp]

NBCUniversal is more valuable than Warner bros Theme parks and more IP

 

[Brian G.]

I know, but If the shoe were on the other foot and NBC Universal was being bought for the first time by Comcast, we wouldn’t label it as a corporate restructuring. It was would an acquisition, and a fairly prominent one at that.

I know it ultimately doesn't matter, but they're both technically corporate restructurings. It's kinda like saying, "That's not a vehicle, it's a truck." A truck is still a vehicle. I was just making a quick point on my phone is all.

This is a major gravitational change and a potential turning point. That doesn’t empirically imply it is all good or all bad, but it’s very major.

Their access to cash flow isn’t as dire as the days of yore, but it’s a big retrenchment. Debt will have to be taken on to expand at the clip they are going. Assuming another buyer is in fact not circling.

I agree it's a major change. I just think we're getting ahead of ourselves by calling it a retrenchment.

We haven't seen how the debt and assets are being split yet, and that's probably going to tell us a lot more about where the company stands financially.

 

[brianlo]

It’s not that they’d cancel current projects it’s more that they’d stop investments in the future to rake in money is my concern.

Running the last 4 quarters, their theme park division earned 3.2B. The totality of NBCU earned 5.29B.


Capital expenditure in the parks during that window was 2.77B. It does include a scant amount of Epic, a portion of Universal Kids and the relatively small smattering of projects on the go. Disney is spending 2.4B on simply maintaining the place so we can be generous and say Uni spends 1.2B on maintenance related capital.

The theme park division has about 2B of play that itself generates. The entire spin off company about 4B annually.

This is before we factor potential debt servicing, or worryingly dividends and-or stock buybacks.

The theme parks can expand, but they are potentially taking on debt to do so if we are talking about new gates. Which isn’t an impossible task, but I would not personally bet on it. I don’t think UK is derailed, but it could be mucked with.

The other factor here is creatives. I’d personally be looking to Disney for more stability on the medium term.