As you’ve likely heard, Comcast plans to separate its media and tech businesses into distinct publicly traded companies. This will happen through a spinoff of NBCUniversal and Sky as its own company, while Comcast and its cable/ISP business will likewise operate independently, and with refined focus.
Before getting into those strategic implications, what do these moving parts consist of? In short, NBCUniversal is a global media conglomerate with theme parks, film & television studios, and content networks such as NBC, Telemundo, Peacock and Bravo. Sky is its European media business.
Meanwhile, Comcast’s core product is network infrastructure and a technology platform that brings connectivity to 65 million homes and businesses – both wired and wireless. Along with connectivity, it offers business services, such as local advertising through its Universal Ads division.
The merging of Comcast and NBCU was intended to achieve classic M&A synergies such as economies of scale and financial leverage. Those goals were achieved to a degree, but it ultimately resulted in a bloated entity whose whole wasn’t greater than the sum of its parts – at least in valuation terms.
Revenue Mix
But beyond Wall Street-driven factors, what could these spinoffs mean on strategic levels for both newly-independent companies? We’ll stick with Comcast in this analysis to stay focused. And focus is the key word. One of the outcomes for Comcast could be a returned focus to its core DNA.
That DNA isn’t a global media conglomerate, but rather a Philadelphia-based local media company. It brings cable TV to your house, among other things. And the infrastructure to do so has positioned it with local audiences through owned & operated channels – and thus visibility opportunities for SMBs.
These are the facets of Comcast’s business that could see greater attention, investment, and political capital, post-spinoff. Without the distractions and opportunity costs from intermingling NBCUniversal’s media business, divisions like Universal Ads will hold a greater share of Comcast’s revenue mix.
And the opportunity for Universal Ads is sizable, as we heard from head of revenue partnerships Greg Lieber at L26 in April. According to Lieber, there’s massive headroom in SMB video advertising. Video has always been a holy grail for SMBs, but few could traditionally afford it. Now its being democratized.
Getting Ducks in a Row
A few other moves from Comcast can be triangulated to demonstrate its momentum leading up to its corporate restructuring. These moves, which preceded the news of its reorganization, paint a picture of Comcast getting its ducks in a row to position a newly-independent and focused local media play.
For example, back in March, it announced an optimization engine for TV and streaming campaigns. Known as Outcomes+, it refines targeting and performance by tapping into Comcast’s first-party video consumption data. This could appeal to an increasingly ROI-obsessed universe of SMB advertisers.
Then in June, Comcast announced a partnership with Affinity solutions to bring even more data intelligence into the Outcomes+ platform. Specifically, Affinity’s transaction data will help Comcast connect the dots between upper-funnel tv ad impressions, and lower-funnel transactional outcomes.
Both of the above moves align with demand signals we’re tracking throughout the results-oriented SMB universe. Combined with Universal Ads’ established position and momentum, these assembling assets should help a newly-focused Comcast return to its DNA and double down as a local media powerhouse.
Join us at Street Fight Live in September in Philidelphia to hear more about Comcast’s next era, and the moves it’s making today.
