What took you so long? That was what some on Wall Street clearly wondered as they rejoiced about the Monday morning news out of Comcast‘s Philadelphia headquarters that the company would follow up its separation of Versant Media, the home of most of its cable networks, with another split. This time, Comcast plans to separate into two independent publicly traded companies through a tax-free spin-off of the media and entertainment NBCUniversal unit, along with its European media business.
Comcast shares popped on Monday, jumping 8.7 percent to $25.19 as of 10:40 a.m. ET after skyrocketing more than 20 percent before the market open, a sign that investors approved of the separation of the company’s media and telecom/tech businesses, maybe even shared a sigh of relief that it was finally coming.
“The split is especially desirable in assigning fairer immediate value to the Studio and Parks businesses,” offered Benchmark analyst Matthew Harrigan. And he estimated that a 20 percent-plus pre-market stock gain “only modestly reflects [the] eventual potential value for New Comcast and NBCUniversal.” In other words: he sees more upside.
The further division of assets comes at a time when the idea that the combination of content and pay-TV distribution under one roof provides a key strategic advantage and allows for “synergies” has lost its luster, even more so in the streaming and digital media age. It was one of the key drivers behind the deal that Comcast struck in late 2009 and closed in early 2011 to first get a controlling stake in NBCUniversal, before taking full control in 2013. Now, that last bastion of vertical integration is falling.
