In every company, they start off with the ability to service the customer at a profit, as time goes on they tend to believe that vertical integration is the key to success and they slowly do build up the company. Sometimes the company wants to buy another company to ensure that revenues come in no matter the economic cycle, the problem is the other company is not really related to the management of the existing company. After a few years they are quietly sold off as the company concentrates on what they know how to make money.

In an article by Aditya Soni and Anhata Rooprai of Reuters, Comcast announced that it will split into 2 companies through a spinoff of NBCUniversal and Sky.

The proposed separation will create one company anchored by Comcast’s cable, wireless and business services arm and the second company around Universal theme parks, film and TV studios, NBC, Peacock and the European media business Sky.

It unwinds 15 years of consolidation at the company that brought together content and distribution, with both feeling the strain from the rapid rise of streaming.

Comcast started off as a cable company, it bought NBCUniversal for $40 billion 15 years ago. The idea was owning the content that people watching cable would pay for.

The rise of Netflix and streaming services means the business plan has competition rather than a built in monopoly. With the rise of Netflix or streaming services, fewer people pay for cable TV. Comcast leans on cable for much of its cash flow.

Comcast co-CEO Mike Cavanagh will run the new NBCUniversal, while Michael Angelakis, will return to lead Comcast as CEO.

Shareholders of the cable and media giant will own stock in both companies. However Comcast through super voting shares owned by CEO Brian Roberts (his Dad, Ralph, founder the company in 1963) will control both companies. Comcast will keep as much as 19.9% in NBCUniversal.

Comcast’s studio business includes Universal Pictures, DreamWorks Animation and Focus Features brought in $11.29 billion in revenue or 9% of the total.

The media business which includes NBC and Peacock, brought in $27.09 billion or 21% of revenue.

The theme parks added $9.84 billion.

The connectivity business generated $70.7 billion or more than half the total revenue for Comcast.

Linking to dividend paying stocks, one of the reasons you like these companies is because they earn profits to pay dividends. All companies buy and sell divisions according to where the executives believe growth will come from as the world of change is around us. Trying to unlock higher shareholder value is a key concept to aspire to.

There are more questions than answers, till the next time – to raising questions.