Comcast Considers Cable Network Spin-Off Amid Shifting Market Pressures

Comcast (CMCSA, Financials) is exploring a potential spin-off of its cable networks, company executives disclosed on their recent earnings call, after reporting better-than-expected third-quarter results.

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Though no specific actions were mentioned, the company admitted ongoing pressure in the U.S. cable industry and is thinking about changes to its portfolio.

Though the possible scope of a spin-off may be smaller than some investors expect, Evercore ISI analysts pointed out that this marks a change for Comcast, which has long stressed synergies between its media segments and connectivity.

With a possible share equity distribution valued roughly $4 per share, Morgan Stanley analysts projected that a cable network spin-off could modestly boost Comcast's growth rate by about 100 basis points.

Scotiabank pointed out that industry developments have led Comcast to reconsider a spin-off alternative for the cable networks, so improving the remaining company's growth rates by eliminating underperforming assets. With such a reorganization, analysts project a possible value addition of about $5 per share.

Benchmark analysts noted that separating the cable company would help Comcast's general valuation to be less burdened. Although Comcast's identity depends on the news division, they said that its sports and event coverage is progressively focused on Peacock, Comcast's streaming platform, instead of traditional cable.

With the possible spin-off regarded as a major change in Comcast's strategy among evolving cable industry dynamics, market analysts will closely monitor Comcast's next actions.

This article first appeared on GuruFocus.