By Comcast Corp (NASDAQ: CMCSA) is in focus today after announcing plans to separate its cable network channels amidst a mass exodus of customers from its TV business.
The media conglomerate lost 365,000 television subscribers in its latest reported quarter.
Comcast expects the spin-off of several assets including Golf Channel and Rotten Tomatoes to create more value for its shareholders.
The multinational is currently trading at about the same price at which it started in 2024.
Why this spin-off is a good idea for Comcast
Tom Rogers dubs the spin-off a “very good move” as it will enable assets like CNBC and MSNBC to “get the resources they need to expand their franchises.”
Rogers is a former president of NBC Cable and currently serves as executive chairman of Oorbit Gaming.
Comcast has so far treated the likes of CNBC and MSNBC as cable channels but the separation will help them “exploit the opportunity of the streaming world,” he noted in an interview on Wednesday.
Rogers sees the company’s decision to spin off its cable network channels not as a way for it to dump problem assets but as “an opportunity for really strong media franchises to broaden themselves.”
Note that Bravo, NBC, and Peacock will remain with Comcast following the separation which is expected to take about a year.
Comcast is fairly positioned for the spin-off
Tom Rogers has confidence in the ability of Comcast to orchestrate a healthy spin-off as it’s not burdened by excessive debt like many of its rivals.
“Given its healthy balance sheet, Comcast is in a position to set this off in a way that’s financially strong,” he added.
Rogers expects it to be a positive as the separated news and entertainment assets will no longer have to compete for resources against the likes of NBC and Peacock – and will receive the priority treatment to grow “way beyond the constraints of today’s cable bundles.”
Note that the spin-off news arrived only weeks after Comcast reported better-than-expected financial results for its third quarter.
Should you invest in Comcast stock today?
Comcast stock may be more attractive now that it’s proceeding with separating its cable network channels.
Analysts at Benchmark currently have a $60 price target on this media stock that translates to about a 40% upside from here.
TD Cowen also has confidence in the company’s long-term financial prospects.
Despite near-term hurdles, the investment firm expects CMCSA to grow its free cash flow on a per-share basis at a compound annualized rate of 14% over the long term.
TD Cowen analysts took a positive tone on Comcast shares in their recent research note also because the Nasdaq-listed firm reported a net increase of 9,000 data subscribers in its fiscal third quarter.
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