What are the futures of Universal, Peacock after Comcast split?
What are the futures of Universal, Peacock after Comcast split?
NBCUniversal’s future independence could be a blessing if the company makes the right moves.
When news of a major corporate spinoff hits the wire, it gives analysts the chance to peer into our crystal balls to see what the future may hold. Earlier this week, Comcast granted such an opportunity by announcing its intent to spin off NBCUniversal spin off NBCUniversal, leaving a host of unanswered questions in the wake of the announcement.
The split will see Comcast go forward with its pay-TV, mobile, and broadband businesses, while NBCU is left to forge ahead with NBC, Bravo, the Universal movie studio, the Peacock streaming service, and other assets. A spinoff means there are plenty of merger and acquisition opportunities ahead, but is that fate assured for NBCU? What’s the future of Universal and Peacock, the company’s two most future-proofed assets, as linear TV continues to fade?
The smaller size of NBCU would naturally lead many observers to think that NBCU’s future is to be acquired by a bigger fish, such as Amazon or Apple. But LightShed analyst Richard Greenfield wrote this week that he believes NBCU has a real chance to scale after being cast loose by Comcast, and could look to make some acquisitions of its own once it’s spun off.
Greenfield specifically mentioned Sony Entertainment as a potential partner for NBCU. Such a purchase would bring not only the Sony Pictures movie studio under NBCU’s control, but potentially also the PlayStation video game console, Sony Music, and even Sony’s device manufacturing arm.
Merging the Universal and Sony studios would give NBCU added power at the box office, as well as more opportunities to produce new TV shows. And Sony has an intriguing lineup of intellectual property that NBCU could surely find ways to exploit, including existing film and TV properties like Spider-Man and Ghostbusters.
Greenfield also listed several targets that LightShed doesn’t think NBCU would be interested in, including AMC Networks, Lionsgate, Nintendo, STARZ, and Versant, the company comprised of cable channels formerly owned by NBCU until a 2025 spinoff.
Other analysts have taken a different view of the NBCU spinoff, however. As reported by Front Office Sports, Wolf Research believes that the NBCU spinoff won’t end up happening at all, and the announcement could serve as the opening act of a larger deal.
“We doubt that this breakup will occur,” Wolfe Research analyst Peter Supino wrote in a note to investors. “Instead, we expect one or both Comcast units to merge with peers or competitors. We believe the breakup plan is strategic to Comcast because it is a legitimately good idea that also strengthens Comcast’s negotiating position with partners who will not want to wait 1-2 years for an otherwise-completed spin-out to ‘season’ for tax purposes.”
That’s more or less exactly how events transpired at Warner Bros. Discovery last year. In June, WBD announced that it would be splitting its cable networks from its studio and streaming segments. But as the months passed, suitors began to inquire what it would take to get control of all of WBD. Ultimately, the company has abandoned plans to spin off any assets in favor of a $110 billion deal with Paramount that will see the latter acquire all of its assets.
If NBCU does move forward on its own, however, I think Peacock will have to be the engine at the heart of the company. Film studios like Universal may never climb back to the levels of success they saw before the COVID-19 pandemic, and linear TV assets NBC and Bravo, while nice to have, won’t be enough to keep NBCU on its feet by themselves.
The good news is, NBCU has a great selection of top sports rights to fall back on — at least for now. Having a package of NFL rights will be all the more important for NBCU once it’s on its own, which should calm talks that the company could be priced out of talks with the league; it simply can’t afford to be. If NBCU wants to go after more sports rights, the rich history of the NBC brand will give other leagues continued confidence in making deals to send major sports events to Peacock. A strong stable of sports rights — including NBA and MLB games, plus a host of others — could help Peacock continue to draw viewers as it tries to catch up to the subscriber totals of the streaming giants.
But Peacock doesn’t have to panic about its relatively small subscriber pool. After a long uphill climb, the streamer is finally set to show a profit for the first time in the second quarter. If it can continue to stay in the black, Peacock will be in a strong position to serve as a hub for all NBCU content in the future, both live and on-demand.
Peacock has already made significant efforts to position itself as a platform not only of the present, but of the future as well. The streamer has embraced vertical video in an effort to attract younger viewers, and is one of the first major American platforms to launch its own original microdramas. If those titles prove popular, they will stand Peacock in good stead as it attempts to improve its profitability metrics.
Ultimately, I still think NBCU will end up in M&A talks. The idea of it becoming a buyer is intriguing, but its existing linear and streaming assets, as well as its large selection of sports rights, would be a tempting target for any company that could wade through the regulatory red tape erected around acquiring a firm that owns an over-the-air broadcast channel.
But there is a strong chance that NBCU tries to build itself up, instead of simply putting itself on the open market. If that happens, Peacock will have to take a leading role in the company’s success, a prospect that looks all the more likely now that the streamer has shown it can turn a profit.
Peacock
Peacock is a subscription video streaming service from NBCUniversal that includes original shows, blockbuster movies, and classic television series. Peacock is home to “Yellowstone,” “The Office,” and original hits like “Poker Face” and “Bel-Air.” You can also watch live sports and NBC programming, including the NFL, MLB, WWE, the Olympics, the Premier League, NASCAR, the French Open, college football and basketball, and the PGA Tour. Premium Plus subscribers can stream their local NBC feed in all 210 markets.