Comcast subsidiary should not guarantee FCC, antitrust reviews

While many questions remain about the implications of Comcast’s announcement to spin off its cable network portfolio into a public company, it is unlikely that the decision to create SpinCo will be the basis for review by the Federal Communications Commission, New Street Research analyst Blair Levin said Wednesday.

“Because the spin-off does not involve any transfer of FCC licenses, there is no FCC review,” Levin wrote in a research note to clients. He also noted that there should be no antitrust issues because the move does not involve any combination that would “increase horizontal or vertical concentration.”

But he warned that the “X factor” is whether Donald Trump, who recently won a second term in the White House, will ask any government officials “slow down or otherwise interfere with a deal involving MSNBC—Trump’s arch-nemesis—until Trump obtains some sort of concession on how MSNBC will cover news in the future.”

“We continue to believe that the Trump administration cannot create material problems as a result of the spin-off. “We recognize that we must be much more creative than in the past in considering different scenarios through which Trump could exercise executive power in his efforts to motivate other media outlets to be more accommodating,” Levin continued. “However, the legal justification for any intervention in the allocation is either absent or very weak. “We think the Trump administration will choose other means to incentivize addressing Trump’s concerns about news coverage.”

Trump has selected Brendan Carr, the author of the FCC’s Project 2025 section and a senior Republican at the FCC, as the agency’s new chairman.

Levine expects the FCC, under Carr’s leadership, to overhaul current broadcast ownership rules to allow for greater local and perhaps national consolidation, creating new opportunities for Comcast and NBCUniversal to participate as a result of its spinoff.

“We have no insight into Comcast/NBC’s plans, but simply note that there will be buying and selling opportunities as partner groups such as Nexstar and Sinclair seek to achieve greater productivity,” he said.

However, Carr recently suggested that Trump’s complaints that ABC, NBC and CBS should lose their licenses on public interest grounds related to news coverage during the election campaign would be considered in licensing deals, citing in particular Trump’s recent complaint about 60 Minutes and Paramount. deal with Skydance Media.

“We think the goal is not to block the deal or take away licenses, but to incentivize news coverage to be more favorable to Trump, which, if successful, could, ironically, create more competition for Fox News.” – said Levin.

At the same time, Elon Musk expressed support for broadcasters returning their spectrum licenses in an auction, while nominee for Secretary of Health and Human Services Robert F. Kennedy Jr. called for a return to policies that would prohibit direct advertising of drugs to consumers , which is an important factor. source of income for television and radio companies.

“While we don’t think either proposal will go through, they add risk to any deal involving a broadcaster,” Levin said. “(The spin-off) removes (MSNBC’s) obstacles to approving other deals that Comcast/NBCU may wish to enter into that require government approval, but that may not be enough.”

In addition to hosting the Comcast and NBCU cable networks, Wall Street analysts and industry executives previously told TheWrap that SpinCo could provide an opportunity to build a comprehensive vehicle for other distressed linear TV assets from competitors such as Paramount or Warner Bros. Discovery.

WBD CEO David Zaslav has long called for media consolidation and recently said the Trump administration “may offer a pace of change and opportunities for consolidation that could be very different, which would have a real positive and accelerated impact on this industry that is so needed.” »

While former Comcast Cable president and CNBC founder Tom Rogers previously told TheWrap that he expects Paramount and WBD to spin off their networks into SpinCo in the future, he acknowledged that “at some point you’re going to run into antitrust issues about how big maybe this package of channels.” and the impact it will have on cable television customers in the future, and the outcome of that depends on who runs the (US) antitrust department.”

When Fox CEO Lachlan Murdoch was asked about a spin-off, he flatly rejected the idea, telling analysts that a split would be difficult from both a cost and promotion perspective, and that his cable network provides enormous synergies between all of our platforms. “, which includes Fox News, the company’s entertainment division, Fox Sports and Tubi.

“While we generally agree, we have reservations about any deal that would create a common owner for both CNN and MSNBC,” Levin added. “However, in this case, spinning off one or more channels could solve Trump’s problem, especially if the spinoff would result in the channel being controlled by a Trump-friendly organization. Again, this could create additional competition for Fox News.”