The starting gun has sounded on US media consolidation

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Call it a sneak preview. Comcast, the US media conglomerate, said last month it would consider spinning off its cable television networks, a fading if profitable business that will eventually disappear in a digital streaming era. With Trump’s election expected to unleash dealmakers’ animal spirits, expect a wave of media M&A as the poor economics of the business becomes a catalysing event.

Comcast itself is a textbook example of the type of Frankenstein’s monster, created over multiple eras, that no longer makes sense in media. Two-thirds of its $120bn in annual revenue comes from “dumb pipes” — broadband and mobile phone service that collectively have more than 30mn customers. Wall Street has, however, turned sour on that business as subscriber additions have turned negative and the capital costs remain high. 

The Philadelphia-based company also has broadcaster NBCUniversal, which produces and distributes film and TV, along with several pay-TV networks such as CNBC and Bravo. The networks are bleeding subscribers as cable and satellite television become less popular.

The 80 per cent fall in the share price of AMC, a pure-play listed cable business, in the past five years suggests investors don’t love those trends. But spinning off its cable networks would rid Comcast of an albatross.

Comcast’s upstart streaming offering, Peacock, is a more intriguing prospect. Its subscribers soared this year to 36mn, helped by NBC’s coverage of the Olympics. But its losses remain massive, at nearly $1bn so far this year. Comcast management says it is open to “partnerships” for Peacock — a nod to the brutal economics of internet-first video.

With a hands-offs Trump administration, Peacock could seek to merge with a rival such as Paramount Plus or Warner Bros Discovery’s Max — something the Biden regime might have frowned on. Warner boss David Zaslav said on Thursday that the White House changeover offered an opportunity to consolidate that would “provide a real positive and accelerated impact on this industry that’s needed”.

Comcast, like rival Walt Disney, has at least had a theme parks division to prop it up while figuring out how to deliver content profitably. Comcast shares, for example, are flat this year. Questions like how to share content across a split-up empire are not easy to resolve. With a dealmaking window suddenly opening, though, next year is a good time to try.

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