Comcast (CMCSA) announced Wednesday that it will spin off select cable television networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY and the Golf Channel. The spinoff includes some of CMCSA's digital assets, including Fandango, Rotten Tomatoes, GolfNow and SportsEngine. It will create a new publicly traded company called SpinCo.
"When you look at our assets, talented management team and balance sheet strength, we are able to set these businesses up for future growth," said Comcast CEO Brian Roberts in a statement. "With significant financial resources from day one, SpinCo will be ideally positioned for success and highly attractive to investors, content creators, distributors and potential partners."
SpinCo will be a pure-play news, sports and entertainment business reaching approximately 70 million households and will be led by Mark Lazarus, the current chairman of NBCUniversal Media Group, as CEO.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"As a standalone company with these outstanding assets, we will be better positioned to serve our audiences and drive shareholder returns in this incredibly dynamic media environment across news, sports and entertainment," Lazarus said. "We see a real opportunity to invest and build additional scale and I'm excited about the growth opportunities this transition will unlock."
In the trailing 12 months, SpinCo generated approximately $7 billion in revenue, Comcast said, adding that the company will have the same dual-class share structure as at CMCSA.
Comcast said it expects the spinoff to be completed in approximately one year, and is subject to approval by its board of directors, regulatory approvals and other closing conditions.
Is Comcast stock a buy, sell or hold?
Comcast is up nearly 16% since mid-June, but shares are flat on a year-to-date basis. Still, Wall Street is bullish on the communication services stock.
According to S&P Global Market Intelligence, the average analyst target price for CMCSA stock is $48.17, representing implied upside of roughly 13% to current levels. Additionally, the consensus recommendation is Buy.
But not everyone is all-in on the large-cap stock. Financial services firm Bernstein has a Market Perform rating (equivalent to a Hold) and $48 price target on CMCSA.
"We maintain our Market-Perform rating for Comcast with a price target of $48," wrote Bernstein analyst Laurent Yoon in a note this morning.
The spinoff news creates upside to this price target and the share price, but "the magnitude of the upside, or even a downside, depends on the structure as well as potential external parties involved. For now, it's too early to tell," the analyst adds.
Related Content
-
13 Answers to Pressing Social Security QuestionsFrom smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
Keep Tax Collectors at Bay with Muni Bond FundsMunicipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Keep Tax Collectors at Bay with Muni Bond Funds
Municipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the FairwayThink of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty MovesIf you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
-
Should I Buy Stocks or Should I Buy Bonds Right Now?Generally speaking, stocks provide reasonable growth while bonds provide stable income. Each play important roles in diversified portfolios.
-
You Were Planning to Retire This Year: Should You Go Ahead?If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get ItThe Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.
-
From Wills to Wishes: An Expert Guide to Your Estate Planning PlaybookConsider supplementing your traditional legal documents with this essential road map to guide your loved ones through the emotional and logistical details that will follow your loss.
