NBC owners to spin off Golf Channel. What’s next for the network?

Welcome back to another extended edition of Hot Mic Newsletter, GOLF’s weekly installment covering all things golf media from me, James Colgan.

THE BIG NEWS

Comcast officially announced the plans on Wednesday spin off Golf Channelthe latest move in a broader effort to clear the decks of its holdings in the ailing cable television business.

The owners of NBC’s media group and sports properties made the Golf Channel part of a half-dozen cable networks that will be spun off in the next 12 months and formed into a new publicly traded company, currently called SpinCo. until he decides on a name. Those networks, which include MSNBC, CNBC and USA Network, have generated more than $7 billion in revenue for Comcast in the past 12 months.

Critically, Comcast will continue NBC and Peacock, which have rights to PGA Tour and USGA events, under the company’s umbrella. Under the new corporate structure, NBC Universal’s media portfolio will include the NBC broadcast network, its NBC Sports and NBC News divisions, and Peacock. Bravo, a critical part of Peacock’s broadcast business, is the only cable network to be retained within the new structure.

Comcast will send two of its most trusted executives — Mark Lazarus, current chairman of NBC Sports and head of several key NBC media initiatives, and Anand Kini, current EVP of corporate strategy for Comcast and CFO for NBC — to led the new company. Comcast will retain ownership of the new company at first, and Comcast Chairman Brian Roberts will have a one-third voting stake in the new venture.

HOW TO GET HERE

The news comes as a reminder of a fundamentally troubling truth about the television business: While audiences have fled LOT for broadcast services, earnings have fallen for cable networks.

For years, executives at major media companies have struggled with how to position these once hugely profitable cable networks in the broadcast world. Some, like ESPN, made plans for life without the so-called “linear TV” business, building exclusive streaming platforms that could be offered directly to the consumer. Others doubled down on it, creating a shield of sports television rights and prestige shows to feed traditional cable channels. AND support growing broadcast platforms – the idea being that “lost” profits on the cable TV side would be made up on the broadcast side. But that strategy belied a troubling truth: If cable TV continued to decline, even those committed to cable would eventually reach a tipping point where their broadcasters were more valuable.

Comcast appears to be preempting that tipping point with Wednesday’s announcement, wiping its hands off the cable TV business while leaving the hard part of charting the future to new leaders at SpinCo.

OH SH*T METER

On the face of it, the picture is not rosy for the networks involved in Wednesday’s announcement. The divestment marks a major blow to the slowly eroding cable TV business and ominously suggests that even some of the biggest legacy cable players think their business is better off. without cable in the picture.

However, the decision does not necessarily spell doom for SpinCo. Industry insiders are keen to point out that while the cable business is in decline, it is still profitable and the divestiture gives Lazarus and Kini the flexibility to explore a wide range of strategic options. SpinCo may look to sell some of its less profitable cable networks, but it could also buy more cable networks to create a larger “bundle” option, or reposition existing portfolios to better succeed in the broadcast world.

Those strategic options were long-held visions after Comcast acquired ownership, but with SpinCo free to seek outside investment, they may not be now. If nothing else, the volume of high-profile talent leaving Comcast for the new company speaks to their sell-out whole wallet for spare parts unlikely.

ON THE GOLF CHANNEL

If the news was a thunderous moment in the media business, it was a thunderbolt in the media golf media business – where the vast majority of the US sports market share falls under two networks, NBC and CBS. The Golf Channel, operating under the NBC banner, has existed for years as an essential (if not extremely profitable) component of the PGA Tour and LPGA media business, providing tour coverage, viewership and access 52 weeks a year.

In the near term, the spinoff raises questions about the shape of the PGA Tour’s existing media contract with NBC. How do the Golf Channel and NBC, which have overlapping production and editorial operations, handle staffing the split? How much of NBC’s $400 million annual rights fee for the PGA Tour falls on Golf Channel under the new corporate structure? whether ANY or just some of them, does this make Golf Channel free to negotiate weekend broadcast deals with other leagues, like, for example, LIV?

BULLETIN

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THE NEW MAKEUP

An easy answer involves the PGA Tour buying partial or even full ownership of Golf Channel from SpinCo, an outcome that has been the subject of rumors dating back to 2020. Such a solution could provide Golf Channel with a home new corporate. allow it to continue the same approach to live golf coverage and save the outstanding PGA Tour and Golf Channel’s LPGA rights from potential headaches associated with SpinCo’s operations. She will also Give the PGA Tour a tenant for its sparkling new $50+ million facility in Ponte Vedra Beach, across the street from the Tour’s downtown. That building was built to house the future of golf television operations, including PGA Tour Live, with space to become a home of remote productions for sports around the world. The idea behind the production facility is great and courageousbut for now he lacks tangible business; Golf Channel’s changing operations may change that.

(If he did the PGA Tour they want buying a cable network to operate its own media rights when it could simply wait for the current rights deal to expire in ’29 and do it for free, while taking advantage of any potential cataclysmic business risks, remains a special thing and a valid question.)

CUTTING

While Wednesday’s news raised an eyebrow, it wasn’t a surprise to those who have been around the Golf Channel for the past several years. The reality, several people told GOLF.com, was that Golf Channel’s resources have changed in the years since the pandemic. Budgets have been allocated differently, on-air talent has not been retained and some productions have been moved abroad. These developments have coincided with a philosophical shift that is pushing resources toward the network’s premiere golf events and away from daily coverage, as head of golf at NBC Sports. said Sam Flood GOLF.com in the spring.

“We looked at the whole portfolio and decided to focus on where the audience is going to be the biggest,” Flood said afterwards. “We use our resources wisely in other events.”

Flood insisted then that the investment in NBC’s golf product was as good as it’s ever been, and maybe that’s true, but what he said next eerily foreshadowed Wednesday’s announcement.

“You have to look at things through the lens that NBC tournament golf, Golf Channel tournament golf and the Golf Channel studios are one big bucket,” he said. “You look at the whole bucket and take advantage of the moment you can raise the game, engage the audience and give the largest audience the best possible experience.”

Comcast, apparently, decided it could make do with a smaller bucket.

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NBC has more than just its PGA Tour golf rights to worry about. Months after signing a $27 billion television deal with the NBA, the network is also on the verge of entering negotiations with the USGA for the governing body’s next round of television rights. The US Open headlines those rights, but the USGA has traditionally sold its television rights only to networks willing to broadcast at least nine of its championships each year.

The sale announcement could complicate those negotiations for NBC by giving them only one over-the-air network to broadcast the USGA. Of course, NBC can offer wall-to-wall USGA coverage of its smaller championships on the Peacock. The streaming service has successfully handled exclusive broadcasts for the NFL and the Olympics in recent months and could position NBC as a “best of both worlds” offering by combining on-air and streaming options. The question, as always, involves price. Now that NBC has more than $4 billion invested annually in the NFL and NBA, the network may not be ready to beat out some of the big-money sports broadcasters, or other sports-hungry networks like TNT, for the highest bid.

WHAT IT TELLS US

That Comcast would keep NBC and the vast majority of its sports portfolio speaks to the fact that sports TV — and more specifically, golf TV – remains a valuable part of the business. The fact that it would separate NBC and its golf television rights from those of the Golf Channel speaks to another and slightly more troubling development.

For years, the prevailing sentiment in the sports TV world was that NBC and the Golf Channel were inseparable. Golf Channel gave NBC valuable scale and an army of talented employees in Stamford, while NBC gave Golf Channel a variety of live tournaments and the financial muscle to keep things running. The PGA Tour — a media company at heart like all pro sports leagues — eagerly welcomed the opportunity to expand the scope of the tour’s conversation and coverage.

The unraveling of the pact and the separation of the two networks tells us that the inseparable relationship has broken down and the once stable television base of pro golf is changing again.