The Great Cable Rollup That Will Never Be

What was once the jetpack on the back of many a media company has now become the chip on their shoulders. 

Cable channels have gone from annuity to albatross in a matter of decades. These dual-revenue darlings added far more billions to the bottom lines of media conglomerates than their broadcast brethren, let alone the dollars coming from movie franchises or theme parks.

But the streaming age has been slaughtering these former cash cows as cord-cutting takes the audience and advertisers that once delivered obscene double-digit profit margins. 

Now moguls want to jettison their jetpacks, though they do so in strangely coy fashion. Last year it was Disney CEO Bob Iger, who floated the trial balloon of sending all his linear channels packing, only to walk it back and absurdly deny he ever suggested it in the first place.

And then on Comcast’s Q3 earnings call on Oct. 31, it was Comcast president Mike Cavanaugh’s turn, publicly musing about spinning off his own company’s channels. 

“We are now exploring whether creating a new well-capitalized company, owned by our shareholders and comprised of our strong portfolio of cable networks, would position them to take advantage of opportunities in the changing media landscape and create value for our shareholders,” he said.

That Iger and Cavanaugh see fit to test-market the idea of unloading the channels gives you an idea of how fraught a prospect it is. If Wall Street swiftly reacted negatively in either instance, that would snuff out the notion of a channel dump instantly.

Or would it? Even in decline, these channels throw off more dollars than streaming could ever hope to replace, and their absence holds out an alternate vision of a nimbler company less freighted by negative terminal-value assets. 

Still, the fantasies don’t stop at channel-free media companies. No, speculation has it we could see a “rollup” of discarded channels from multiple companies that would come together to form one supergroup. 

Picture, for instance, a Comcast spinoff of USA, Syfy and CNBC coming together with Disney Channel and National Geographic, as well as, say, A+E Networks and Hallmark Channel.

The economic logic here is that if these once mighty brands pool their resources, they can eke out their twilight years on the fumes of their shared strength. More like “The Expendables” or “Suicide Squad” than “The Avengers.” 

I would put the odds of this rollup actually transpiring at less than zero. It reminds me of the last rollup fantasy scenario bouncing around years ago during the digital-media apocalypse as brands like Buzzfeed and Vice fell to earth and speculation ran rampant that they would all combine. We all know how that turned out.

The odds of a cable rollup are even more remote because many of the channels in question are not really brands or businesses at all. They are the result of leverage plays by their parent companies, which used must-have channels such as ESPN to ram the terms for additional carriage contracts down the throats of MVPDs that couldn’t afford to say no. 

Those arrangements won’t mean anything this time around, which would make a rollup the ultimate litmus test for a cable brand. Just don’t be surprised if there aren’t even enough true brands left standing to roll up in the first place.