“A real opportunity to invest and build additional scale” and a “new growth trajectory”. These are some of the things Brian Roberts runs Comcast promised Wednesday by unveiling his plan for spin-off most of its cable channels, once a key driver of profit growth, into a separate company.

The new entity, led by Mark Lazarus, will include USA Network, Syfy, MSNBC and CNBC, while the cable channel Well donethe NBC broadcast network and streaming service Peacock will remain part of Comcast’s entertainment arm, NBCUniversal.

Wall Street stock analysts wasted no time in sharing their views on the move. As of 11:50 a.m. ET, Comcast shares were slightly higher as experts had mixed opinions on the news.

Bank of America analyst Jessica Reif Ehrlich was rather optimistic about the development. “SpinCo could be used as a consolidation vehicle for cable networks across the industry. This move by Comcast could also reduce regulatory concerns over another potential merger attempt with a large cable peer,” she wrote.

“In our view, this is a positive strategic step for Comcast because it (1) indicates a desire by Comcast to unbundle slower-growing assets while (2) potentially creating an entity capable of gaining scale to limit declines/stimulate growth and (2) 3) provide healthy capital returns via a dividend, (4) should be accretive to parent company Comcast’s growth and (5) could reduce regulatory hurdles sufficiently to that Comcast could potentially attempt another big cable merger,” Reif-Ehrlich explained.

Maintain your “purchase” and $50 stock price target, the BofA expert concluded: “Backed by its strong balance sheet and healthy free cash flow generation, Comcast is expected to generate strong returns on capital and… is attractively valued.” »

Before Comcast made things official, Bernstein analyst Laurent Yoonwhich has a “market performance” rating and $48 price target on Comcast stock, weighed in on the expected news following Tuesday evening’s reports with a large dose of caution.

“We do not expect SpinCo to be accretive to the consolidated valuation, at least not significantly, in the near future,” he wrote. “(The) cable multiple has contracted in recent years, and traditional media is in perpetual decline with corresponding valuation multiples today. With traditional MVPD (multichannel video program distributor) subscribers declining in the single digits per year, the valuation of both entities is unlikely to generate significant upside potential.

What would you say about the idea that the new entity could become a roll-up vehicle for more cable channels? “This move creates a way to further consolidate assets in similar situations that may not be attractive to public market investors but attractive enough to private market investors at an appropriate valuation,” Yoon emphasized. “We won’t debate here what would be an ‘appropriate’ valuation, but what would you put on an asset in perpetual decline?

The Bernstein analyst concluded: “This move would have been value-creating a few years ago, when cable and media multiples were significantly higher, but better late than never.”

Beyond traditional Wall Street analysts, Madison and Wall main Brian Wieser focused on what the spinoff means for Comcast’s scale. “In a world where scale matters more than ever, whether selling TV advertising or selling ads across multiple platforms to deliver maximum scale, unless Comcast has a vision of what it would do with the capital to expand its remaining media business or how it would result in the company merging with another company’s cable networks, the transaction would not be synergistic,” he wrote.

Wieser added: “In today’s era, advertising budgets are allocated to the largest sellers before being allocated to the smaller sellers, because otherwise advertisers end up with more unintended audience duplication than they would like. otherwise. In the future, scale will matter even more as marketers increasingly prioritize the largest digital platforms over traditional ad sellers.

Distribution companies also benefit from scale “because even today a network group is better able to obtain higher prices than it would otherwise obtain if it can get a distributor to take a network that consumers do not particularly want in order to have access to the networks they want. do,” emphasized the expert. “Content costs are lower when they can be amortized across more media outlets.”

Comcast noted Wednesday that the new cable network vehicle could become “a potential partner and acquirer of other complementary media companies.”

Wieser noted: “If, after the split, the company is sold or pursues further mergers and acquisitions, there are at least new large-scale opportunities for other cable network operators (or possibly for digital platforms if they have the audacity to try). this type of large-scale mergers and acquisitions in a new regulatory regime).

In a note dated October 31, TD Cowen analyst Doug Creutz said of the idea of ​​creating Comcast’s cable networks that it would “separate this more mature and difficult business, perhaps into a company that would combine with another player’s cable networks to achieve a on a larger scale – although such a venture may have to overcome regulatory hurdles.”

Macquarie analyst Tim Nollen also weighed in that day. “Cable network rotation would eliminate this declining revenue component that likely weighs on the commercial multiple. NBCU has been downplaying cable networks for some time, dropping regional sports and putting content on Peacock.

But he also cautioned: “We question the extent to which the cable networks could be self-sustaining, without ties to NBCU’s studios and streaming capabilities, and without advertising ties.” » His conclusion: “industrial mergers and acquisitions/joint ventures seem possible”.