Comcast’s plan to split from NBCUniversal isn’t expected to draw much in the way of antitrust scrutiny. After all, the companies are essentially de-consolidating.
But after Monday’s news of the move, questions remain as to what the company will face, perhaps not so much for the split but if either of the two new entities is eventually sold.
Comcast co-CEO Brian Roberts said on an investor call today that the plan was “absolutely not” to prime the company for M&A, but to “put each company in the strongest position to create value, fully monetize its assets and aggressively pursue its own organic growth strategies.”
That said, speculation will likely continue, particularly if Paramount completes its acquisition of Warner Bros. Discovery, a $110 billion mega merger that has been expected to lead to other transactions.
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Hanging over all of this has been the Trump administration.
While it’s still viewed in corporate circles as much more favorable to mergers than the Biden administration, winning regulatory approval also has come with a cost. The then-Paramount Global settled Trump’s lawsuit against CBS over the way 60 Minutes edited an interview with Kamala Harris, in a move widely seen as smoothing the way for FCC approval of Skydance’s purchase a few weeks later. Skydance also made commitments favored by the administration, including a vow not to pursue diversity, equity and inclusion policies and another to hire a CBS News ombudsman. New Street Research’s Blair Levin dubbed it a “Trump transaction tax.”
Here are some factors to consider on the road ahead for the Comcast-NBCU split:
The FCC. The exact structure of the Comcast split has not been announced, but some analysts say it will not trigger an FCC review.
That is a big deal under any circumstances. The FCC reviews transactions that transfer control of broadcast licenses and, through a process that includes public comment, determines whether they are in the “public interest.” That injects a bit of uncertainty, but there’s some expectation that Comcast could structure the deal in a way that control of NBC’s broadcast stations does not transfer.
Back in 2005, Viacom did a split with CBS that did not undergo an FCC review. The old Viacom was renamed CBS Corp., while cable networks went to “new Viacom.” Of course, the company eventually re-merged in 2019. Still unclear is whether any other licenses Comcast holds, such as those for satellite earth stations and wireless, would be part of an FCC review, albeit those are seen as less of a challenge.
Comcast has been one of Trump’s targets: He has dubbed the company “Concast” as he has railed against news coverage and has attacked Roberts personally. FCC chairman Brendan Carr, appointed by Trump, has launched investigations into the company’s DEI practices and its relationships with its affiliates. He also has not ruled out further orders requiring early renewals of broadcast licenses, as he did with Disney.
Gigi Sohn, counselor to Obama-era FCC chairman Tom Wheeler and senior fellow at the Benton Institute, said that to go through an FCC transfer would be “walking right into it.” “Then you are at Brendan Carr’s mercy,” she said.
DOJ. The split itself is not expected to raise antitrust issues, but there is some question of what happens next, after the transaction is completed. That process is expected to take about a year.
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John C. Hodulik, analyst for UBS, wrote in a research note Monday that the split “makes it more likely the companies will be involved in M&A in the future (within the boundaries of the tax free status of the spin).”
If there is some kind of future deal, there could be some antitrust issues, more so if NBCU is not the buyer but the entity being sold. Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, wrote via email, “If it is a bigger player, then the question is whether that creates higher concentration in streaming. Who they sell to is more complicated than most would think.”
As for Comcast, she wrote that there may be issues with a combination in an industry that already has seen the proposed merger of Charter with Cox. She wrote, “There is pretty high concentration in cable and digital broadcast satellite multi-video programming distribution. Some past cable mergers have been controversial for that reason.” She wrote that she would expect “political intervention by Trump” and other regulators. “Sad…,” she wrote.
For now, Comcast is dismissing M&A talk, but there also is the matter of timing. If a Democrat is elected to the White House in 2028, the pressure on the new president could be on to take an overall hard line against mergers, creating something of a scramble to get deals through even in a Trump-influenced environment.
Hodulik wrote that the split “has started to fuel conversation around industry M&A and strategic optionality for both businesses going forward.”
He wrote, “This includes potential consolidation in cable distribution, where secular pressures from fiber, fixed wireless and satellite are impacting the core broadband business. In Media, we have seen high profile deals over the past year (FOX/ROKU, PSKY/WBD), leaving NBCU as a smaller scale Media asset. That said, any M&A would likely take time in order to preserve the tax free nature of the spin.”
