(Bloomberg) -- Comcast Corp. said it’s considering spinning off its cable networks into a new company as it grapples with the continuing industry-wide decline in subscribers.
“We’re going to commence a study of whether there’s a good idea in creating a new, well-capitalized company that would go to our shareholders — existing shareholders — comprised of our cable portfolio networks,” President Mike Cavanagh said on a call with analysts to discuss earnings. “We’re not talking about Peacock or broadcast networks.”
Cable companies have been struggling to stem a flood of cable subscriber losses as consumers increasingly flock to streaming services. In the second quarter, Warner Bros. Discovery Inc. and Paramount Global wrote down the value of their cable assets by a total of $15 billion. Executives don’t expect the tide to turn anytime soon and have been focusing more on live events such as sports.
In the third quarter, Comcast lost 365,000 cable-TV customers, the company said in a statement on Thursday. Its cable networks include MSNBC, CNBC, E!, and Bravo, among others.
“In a moment of a lot of transition in the industries we’re a part of, I think we’ve got a very strong hand,” Cavanagh said. “I think the idea of playing some offense when you combine the balance sheet strength that we have, the assets we have, and the management team we have, there may be some smart things to do, and we want to study that.”
Comcast reported third-quarter sales and profit that exceeded analysts’ expectations after the company’s NBCUniversal division got a lift from the Summer Olympics, an event that generated $1.4 billion in advertising revenue.
The Paris Games delivered a ratings bonanza for NBC after less-viewed stops in Tokyo and Rio de Janeiro. The opening ceremony drew over 28.6 million viewers, the largest audience since London in 2012. NBC also bet big on young influencers to draw fresh audiences and reignite Americans’ interest in the Olympics.
Comcast’s Peacock service, which exclusively streamed the Olympics, signed up 3 million new customers in the quarter, bringing its total to 36 million. It also benefitted from an exclusive NFL game played in Brazil. But the unit is still losing money, including $436 million in the third quarter, though that was less than Wall Street predicted.
Sales at Comcast’s media segment overall jumped 37% to $8.23 billion.
Cavanagh said Comcast is “open to having discussions exploring the idea” of partnerships in streaming. “The bar is really high for a whole company, media-type of acquisition.” But streaming partnerships “could be interesting,” he said, noting that “they’re very complicated.”
Overall, revenue at Philadelphia-based Comcast climbed 6.5% to $32.1 billion in the third quarter, beating analysts’ projections of $31.7 billion. Adjusted earnings rose to $1.12 a share, exceeding forecasts of $1.06.
Earnings before interest, taxes, depreciation and amortization rose 2.3% to $9.74 billion. The stock gained 2.5% to $43.31 Thursday morning in New York.
Revenue from the company’s film and TV studios rose 12% to $2.83 billion, driven by the success of summer films Twisters and Despicable Me 4. Sales and profit at Comcast’s theme parks declined amid an overall slowdown in the industry.
Comcast continued to lose broadband subscribers. The company parted with 87,000 internet customers, attributing most of the churn to the end of the Affordable Connectivity Program, a federal subsidy. Comcast said it gained 9,000 broadband customers, absent the impact of the program.
A month-long AT&T Inc. work stoppage in the Southeast, where the companies compete directly, helped stanch those losses in the quarter. Sales of wireless phone plans remained a bright spot with 319,000 new customer editions.
(Updates with comments on streaming in fifth paragraph.)
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