comcast announced Monday that it plans to spin off its remaining media business into a new publicly traded company to become more competitive in a media environment increasingly characterized by pressure from streaming rivals and consolidation.
The separation will be carried out through a tax-free spinoff of NBCUniversal and Sky and is expected to be completed within about a year, the company said in a statement. Comcast shareholders will own shares in both Comcast and NBCUniversal.
“Looking ahead, it has become clear that our Technology and Media businesses face fundamentally different and attractive opportunities that are best pursued with dedicated focus, strategic flexibility and tailored investment priorities,” Co-CEO and Chairman Brian Roberts said on a conference call with investors on Monday.
“That’s why today we announced an important next step in Comcast’s evolution: our plan to create two separate companies, Comcast and NBCUniversal.”
Comcast shares rose as much as 17% in early trading, but pared out some of the gains and were up about 9% as of 10 a.m. ET.
Comcast Co-CEO Mike Cavanagh will become CEO of NBCUniversal, and former Comcast Chief Financial Officer Michael Angelakis will become Comcast’s CEO.
Roberts will continue to be “actively involved” in the management teams of both Comcast and NBCUniversal, the company said. Roberts added on Monday that he plans to work closely with both Kavanaugh and Angelakis “as both companies move into this exciting new chapter.”
The Media segment includes the company’s Universal Theme Parks division, Universal Movie and Television Studios, NBC and Telemundo television networks, Peacock streaming service Bravo, and European media business Sky.
The remaining company, Comcast, will focus on cable, wireless and business services.
The split comes as Comcast’s stock price has plunged 30% in the past 12 months amid significant challenges facing the media industry due to the shift from TV bundles to streaming.
Comcast stock over the past year.
Earlier this year, Comcast completed the separation of its portfolio of cable TV networks and digital assets, including CNBC and MS NOW, into a separate public company. Versant Media.
The media sector has recently seen a wave of consolidation as legacy players seek to scale up, with few companies going public in a challenging environment.
“It’s no surprise that competition in the media and communications industry continues to intensify and the pace of change continues to accelerate. We do not expect these conditions to change anytime soon,” Kavanaugh said on Monday’s conference call.
Paramount Skydance completed its merger last year and earlier this month won Justice Department approval for its $110 billion deal with Warner Bros. Discovery. meanwhile, fox concluded a purchase agreement Roku 22 billion earlier this month.
During Comcast’s latest split, the company announced it would suspend stock buybacks. Mr. Cavanagh said he would provide further details about each company’s dividend policy before the separation is completed.
“There are important details to be finalized and we will provide updates on those as we proceed,” he added.
Comcast said it plans to retain ownership of up to 19.9% of NBCUniversal for up to a year after the transaction closes and intends to monetize it tax-efficiently over time. The transaction is subject to board and regulatory approval.
Disclosure: Versant is the parent company of CNBC.
