Market players were hoping for a quiet week to recover from the Cannes Lions hangover and heat by the July 4th weekend. Instead, they’re scrambling for information to better understand how Comcast and NBCUniversal’s breakup will affect them.
To quickly recap, Comcast CEO Brian Roberts announced Monday (June 29) that the two businesses that were merged after the 2009 deal will be separated as part of a tax-free spinoff. Comcast spun out its cable TV business Versant in January.
Roberts said the newly freed NBCU will serve as a “unique, independent, concentrated company that spans NBC, multiple cable networks, Telemundo, Peacock and Sky, and is home to some of the industry’s most valuable brands and assets across theme parks, film, television, streaming, sports and news.” Mike Cavanagh, currently co-chief executive officer of Comcast, will become CEO of NBCU.
The spin-out plan came as a surprise to Roberts, but was well-received by the market. Comcast stock is up 6.5% since Monday at press time. What that means for advertisers is less clear.
The three media buyers told Digiday they had no information from NBCU or Comcast officials about how the split would affect their clients or how elements of the Comcast/NBCU ad stack would be separated. However, ad server and DSP providers Freewheel and Universal Ads will remain with Comcast.
Dan Laakman, CEO of performance advertising business Keynes, cited a number of “untapped opportunities” that could change the landscape for agencies working with NBCU’s network and Freewheel itself.
“Will they be able to offer the same incentives? Will Freewheel continue to have access to the same types of inventory as NBCU? Will that change and allow NBCU to partner with Magnite or Trade Desk?” Larkman asked.
Although details were not disclosed, agency experts told Digiday that the move could have an impact on the CPM once the situation settles down.
“We are trying to understand what this means from a negotiating position, particularly as it relates to decentralized pricing,” said Caitlin McInnis, Executive Director of Investments at Crossmedia.
Some expect NBCU to look to raise the pricing floor for its streaming and linear TV inventory, especially as it looks to fund big-ticket sports rights deals amid competition from streaming platforms.
Luke Moore, vice president, managing director and media partner at full-service agency FUSE Create, said in an email that “Once the spinoff is complete (likely in 12 months), NBCUniversal will be under pressure to grow advertising and subscription revenue without Comcast’s support.” “This could shift available inventory toward higher CPM media purchases, such as addressable and data-heavy media products, and reduce the focus on traditional linear TV.”
Other media agency executives were skeptical that the split would restore NBCU’s influence with advertisers.
“They can try everything they want, but they’re still in a competitive market,” said Lisa Hardman, RPA’s chief enterprise integration officer.
Few buyers expect the split to disrupt negotiations, as the TV business has been strong this year. “I definitely don’t think it’s going to impact this year’s upfront, and I definitely don’t think it’s going to impact next year,” said Samantha Rose, vice president and head of investments at Horizon Media.
Things could change by 2027, forcing unbundled NBCU to establish a strong foothold. “Next year could be a different story because it will be their first year on the front lines as independent entities,” said Abby McNally, group director of connection strategy at Collective Majors.
“NBC has historically been a difficult place to ask for better rates. I hope this separation will make NBC more open to discussions with advertisers. I see that as a professional,” McInnis said.
Keynes’ Laakman added that advertisers with existing long-term contracts, such as offering sponsorship slots, were also unlikely to see changes. “Companies like NBC [will] We will protect our advertisers at all costs,” he said.
But buyers looking further ahead are sensing a problem. Without a partnership with Comcast, NBCU could become an acquisition target for a deep-pocketed streamer (Netflix, for example, might consider another major media acquisition).
One media buyer spoke candidly on condition of anonymity to describe a “catastrophe” scenario in which NBCU’s control of Olympic broadcast rights was compromised by a breakup or merger with a larger entity.
“If they reduce the amount, [coverage]That will ultimately impact what we plan and why our clients participate. [for Olympic media buyers]” said the buyer.
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