A free-market cable regulator has been named chairman of the Federal Communications Commission, sparking buzz on Wall Street that a much-needed deal is on the way.
One of the world's largest media organizations has made a major change to its business model, separating its cable programming from most of the rest of the company and positioning itself for some kind of deal.
Coincidence? Not even close, according to wireline bankers and lawyers assessing developments on Wall Street and Washington this week.
FCC Commissioner Brendan Carr has become chairman of the agency, on the brink of making market-friendly changes to its ailing media business, while giant media conglomerate Comcast announced it would split into two separate companies.
Indeed, there is little debate that Comcast's new business model (spinning off MSNBC, CNBC, and other cable properties) is the result of a more transaction-friendly administration taking over the vast administrative state in Washington, D.C. There is no room for this, industry insiders told On the Money.
The broader dispute, these sources said, is due to Comcast's new cable company and overall business restructuring, which company will be the real estate buyer in the massive media consolidation that network executives believe is coming. The question is whether to become a seller or to become a seller.
Media executives are filing both lawsuits, along with bankers and lawyers who specialize in transactional work. Comcast's cable business isn't the only one whose future profit margins could shrink due to the rise of 5G (the latter, of course, due to cord cutting).
Comcast will be charging less for people who use traditional cable lines to connect, which will put further pressure on its balance sheet.
Throw in the extreme left-wing bias of programming that most consumers find disgusting (MSNBC tops the list, followed by Universal's crappy virtue-mongering movies the other half of the company), and this company… sector may become so. You need to sell things to survive in the long run.
In my opinion, the bull case for a new form of Comcast is equally compelling. Detaching the cable section provides an opportunity for expansion. MSNBC and CNBC are still making significant profits, and the new company, SpinCo, can use these profits to gain market share.
The company could be one of the last to survive as most other cable networks disappear or develop digital strategies similar to what CNN is trying to do.
Yes, 5G is supposed to be the future, but we've been predicting the future for a long time, and Comcast's cable pipes are still generating a lot of revenue.
In a consensus-building framework, that hardly matters. Because the Joe Biden FCC is joining with his left-wing Justice Department Antitrust Division, and Lina Khan's deal-hating Federal Trade Commission is about to be ousted.
President Trump appointed the more deal-friendly Mr. Carr and installed like-minded people at other regulators.
That's why media industry insiders tell me they can't wait for the deal to start.
