In this articleCMCSAFollow your favorite stocksCREATE FREE ACCOUNTNikolas Kokovlis | Nurphoto | Getty ImagesComcast shares posted modest gains Wednesday after the company announced its plan to spin off all of NBCUniversal’s cable networks, except Bravo, into a separate publicly traded entity.Investors’ initial shrug at the proposed transaction underscores the uncertainty of the maneuver.The hope for Comcast is that by shedding declining assets, the company’s shares will rise. Cable networks are still profitable, but they’re hemorrhaging subscribers and revenue every year as Americans cancel traditional pay TV for streaming services. That may be an anchor on Comcast’s shares. Wall Street typically doesn’t like assets with slumping revenue and profit.Still, there’s plenty of uncertainty around the spinoff. It’s unclear if Comcast investors will care that much. The NBCUniversal cable networks are relatively small assets, generating about $7 billion in revenue over the 12 months ended Sept. 30, according to a Comcast news release. For comparison, the rest of Comcast took in about $116 billion in revenue.It’s also unclear if the spun-off company will flourish as a publicly traded entity. If Comcast is shedding cable networks because Wall Street doesn’t like them, why would shareholders want a company that consists of declining assets?There’s a reason Disney decided not to spin its cable assets. The company considered it and ultimately decided the earnings lost from spinning profitable networks would trump any potential multiple expansion from a spin. Still, Disney’s cable networks, including FX and Disney Channel, are more integrated with its streaming platforms than NBCUniversal’s cable networks are with Peacock, the company’s subscription streaming service.The new company, temporarily called “SpinCo,” will generate cash and could pay a healthy dividend to shareholders looking to invest in declining cash assets. But that’s usually more of a private equity strategy. That may ultimately be where cable networks are heading — to private ownership willing to harvest them for cash.It’s also possible some of the cable networks could find new footing outside of NBCUniversal’s ownership. SpinCo’s CEO-to-be, Mark Lazarus, may be able to strike new licensing agreements with other streaming services now that the cable assets aren’t purely a marketing and content distribution tool for Peacock.Profits for SpinCo can be reinvested into businesses, including CNBC and MSNBC, instead of being diverted toward Peacock and NBCUniversal’s theme parks.Another possible path for the spinoff is as a rollup entity for other cable networks. Comcast is purposefully structuring SpinCo with low debt. Perhaps the company could take on some of Warner Bros. Discovery’s debt and its cable networks. The same could be said for Paramount Global.The bigger motivationWith so much unknown, Comcast probably isn’t doing this because it’s sure the spin will be a slam dunk for investors. Instead, Comcast’s motivations may be a signal to the media industry that it’s time to enter a new phase.”There’s simply not enough revenue in these businesses to cover the costs anymore,” Kevin Mayer, co-CEO of Candle Media and a former Disney executive, said in an interview. “There has to be consolidation now. It’s Econ 101.”That’s a sentiment Warner Bros. Discovery Chief Executive Officer David Zaslav addressed during his company’s earnings call earlier this month.”This is an industry that …
