A free-market cable regulator gets nominated as chair of the Federal Communications Commission, setting tongues wagging on Wall Street that much-needed dealmaking will take place.
One of the largest media organizations in the world dramatically alters its business model, separating its cable programming from much of the rest of its company to set itself up for some dealmaking.
Coincidence? Not even close, according to telecom bankers and lawyers assessing this week’s developments on Wall Street and in Washington.
FCC Commish Brendan Carr is on the precipice to be the agency’s chair and enact market-friendly change on the floundering media business, while the giant media conglomerate Comcast announced it will break up into two different companies.
Yes, there’s little debate that Comcast’s new business model — spinning off cable properties like MSNBC, CNBC, etc. — is a result of a more deal-friendly administration taking over the vast administrative state in DC, industry insiders tell On The Money.
A much wider dispute, according to these sources, is whether Comcast’s new cable company — and the overall business reorganization — makes either entity a buyer or a seller of properties in the great media consolidation that network executives believe is coming.
Media execs, along with those bankers and lawyers who specialize in deal work, are making both cases. With the rise of 5G, it’s not just Comcast’s cable operations that could see a slimming of future profit margins (the latter, of course, from cord-cutting).
Comcast’s balance sheet will come under additional pressure because it will be charging fewer people to use its traditional cable lines for connectivity.
Throw in the heavy lefty bias of programming (MSNBC at the top of the list, followed by all those crappy virtue-signaling movies out of Universal in the other half of the company) that most consumers find abhorrent, and both parts of this company might need to sell stuff to survive longer-term.
The bull case for Comcast in its new form is equally compelling, in my opinion. Splitting off the cable stuff will give it a chance to grow. MSNBC and CNBC are still pretty profitable, and the new company, SpinCo, can use these profits to gain market share.
It can become the last man standing as most other cable networks disappear or develop a digital strategy similar to what CNN is trying to do.
Yes, 5G is supposed to be the future, but we have been predicting the future for a long time and Comcast’s cable pipes still generate significant income.
In the dealmaking scheme of things, it almost doesn’t matter because the Joe Biden FCC combined with his lefty DOJ antitrust division and Lina Khan’s deal-hating Federal Trade Commission are about to be banished.
Trump has installed the much more deal-friendly Carr, as well as like-minded folks in other regulatory agencies.
That’s why media industry insiders tell me they can’t wait for the dealmaking to begin.