Comcast Set to Offload MSNBC and CNBC, Here’s What it Means

What Happened?

The rumors turned out to be true.

Cable news channels have had a rough few years (arguably, except for Fox News). As more and more people ‘cut the cord’ on cable, viewership has declined.

Since the election, viewership on CNN and MSNBC has collapsed. For some programs, viewers are down nearly 50%.

Of course, it could rebound. During President Trump’s last administration, mainstream media saw an increase in viewership for cable news, and an increase in readership for the print media.

Perhaps it will be the same again. But we wouldn’t bet on it. Because if Comcast Corp [CMCSA] thought things could rebound, it wouldn’t have announced plans to spin off the MSNBC and CNBC cable channels.

Why it Matters

It’s fair to say that all legacy media outlets have struggled to adapt to how the market has changed these past 20 years.

That goes for network TV stations, cable, and the print media.

Arguably, the format that has taken the biggest hit is print. Back in 2005, the Wall Street Journal had a circulation of around two million printed copies of its newspaper. Today, its print circulation is less than half-a-million.

Granted, it has more than picked up the slack with its digital offering — around 3.7 million. But the digital business revenue is different to the old print business revenue. What the industry used to term as the ‘rivers of gold’, the classified ads you would see in newspapers, doesn’t exist in online news media.

It’s a similar story for cable TV. Although it’s more of a slow burn. In 2017, there were 96.3 million cable TV subscribers in the U.S. This year, the number is just 68.7 million.

And that number is in terminal decline. According to Statista, half of adults aged 65 and over have a cable TV subscription. For those aged 18–34 it’s only 34%.

You can see in other ways how the market is changing. The NFL now has a weekly Thursday night game exclusively on the Amazon Prime streaming service. This Christmas Day will see two NFL games broadcast exclusively on Netflix.

We’re now more than 30 years into the internet revolution. The question is whether there will be further opportunities for investors to profit.

How it Affects You

As mentioned above, Comcast has announced plans to spin-off cable channels CNBC and MSNBC. If it finds a buyer, it will likely herald one of the biggest and revolutionary changes to the media industry in years.

But make no mistake, Comcast isn’t selling because it wants to get out at the top. It’s selling before the business becomes worthless.

The plan will also likely be watched by The Walt Disney Company [DIS], owner of the ESPN cable sports channel. ESPN has already embarked on a non-cable plan. But what Comcast does with MSNBC and CNBC will be important. Because ESPN is likewise experiencing lower viewership. And it has already axed millions of dollars from its payroll over the past two year.

But that’s not the only shake-up. As the legacy media industry has shrunk in terms of viewership, alternative media has grown. And yet, there are few ways for investors to profitably take part in that growth.

So while most folks will look at the Comcast decision, we recommend paying closer attention to the businesses that are involved in producing alternative media content.

With the rapid growth that has taken place in recent years, those financing those businesses will no doubt look for an opportunity to cash-in on their investments. The time for that may soon be upon us.