Comcast shares surged more than 21% in US premarket trading on Monday after the company announced plans to split itself into two separate publicly traded companies. At 7:40am ET, Comcast stock was up 21.75% at $28.21 in premarket trading. The stock had closed the previous session at $23.17.
Comcast to split into two companies
Comcast said it will separate its media and entertainment business from its broadband and connectivity business through a tax-free spinoff. The new media company will include NBCUniversal and Sky, along with Universal theme parks, movie and TV studios, NBC, and the Peacock streaming service. The remaining Comcast business will focus on cable internet, wireless services, and business services. The company expects the separation to be completed in about one year.
Shareholders will own both companies
After the split is completed, existing Comcast shareholders will receive shares in both Comcast and NBCUniversal. Comcast also said it plans to keep up to a 19.9% stake in NBCUniversal for up to one year after the transaction closes. The company said it will gradually sell that stake in a tax-efficient way over time.
Leadership changes announced
As part of the separation, Comcast co-CEO Mike Cavanagh will become CEO of NBCUniversal. Former Comcast Chief Financial Officer Michael Angelakis will return to lead Comcast as CEO. Meanwhile, Comcast Chairman and co-CEO Brian L. Roberts will continue to play an active leadership role at both Comcast and NBCUniversal.
Company says split will create new opportunities
“The transaction we are announcing will unlock a more entrepreneurial management approach and open up a multitude of new opportunities for each business,” Roberts said. “Comcast will continue to build on its leadership in connectivity, while NBCUniversal, together with Sky, will have the scale, brands, content and financial resources to compete as a premier global media and entertainment company,” Cavanagh stated in a press note.
Comcast has faced a lot of pressure as more people cancel traditional cable TV and switch to streaming platforms like Netflix. The company is also losing broadband customers to wireless internet services from T-Mobile and Verizon, as well as to fiber internet providers.
As reported by CNBC, its shares had fallen about 30% over the past 12 months before Monday’s rally. Earlier this year, Comcast also completed the spinoff of its cable TV networks and digital media assets, including CNBC and MSNBC, into a separate public company called Versant Media.
Media industry is changing fast
Comcast’s decision comes as media companies continue to reshape their businesses to stay competitive. The industry has seen several major deals in recent months. Paramount Skydance completed its merger last year, while Warner Bros. Discovery recently received US Department of Justice approval for its $110 billion deal. Earlier this month, Fox also agreed to buy Roku in a $22 billion deal.
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