This article is part of an ongoing series detailing the essential news readers need to know about the ad industry’s most complex topics.
Marketers had been hoping for a quiet week to recover from the hangovers and heat of Cannes Lions before the 4th of July weekend. Instead, they’re scrambling for information to better understand how the breakup of Comcast and NBCUniversal might affect them.
To quickly recap: Comcast CEO Brian Roberts announced Monday (June 29th) that the two companies, which had been merged following a 2009 deal, would separate as part of a tax-free spinoff. Comcast spun out its cable TV business Versant back in January.
Roberts said the newly unshackled NBCU, which will span NBC, several cable networks, Telemundo, Peacock, and Sky, would operate as a “unique, focused company that will be home to some of the industry’s most valuable brands and assets across theme parks, film, television, streaming, sports, and news.” Mike Cavanagh, the current co-chief executive of Comcast, is set to become CEO at NBCU.
The spin-off plan was a surprise from Roberts, but has been received well by the markets; Comcast’s share price has risen 6.5% since Monday at the time of writing. What it means for advertisers is less clear.
Uncertainty for Advertisers
Three media buyers told Digiday they’d had no information from contacts inside NBCU or Comcast regarding how the split might affect their clients, or how aspects of the Comcast/NBCU ad stack will be divided — though ad server and DSP provider Freewheel and Premium Ads are expected to stay with Comcast.
Dan Larkman, CEO of performance marketing firm Keynes, listed a number of “unknown variables” that could change the picture for agencies working with either NBCU’s networks or Freewheel itself. “Can they offer the same incentives? Is Freewheel still going to have access to the same kind of inventory it has with NBCU? Is that going to change, allowing NBCU to go with Magnite or The Trade Desk?” Larkman asked.
Despite the lack of detail, agency executives suggested the move could impact CPMs once the dust has settled. “We’re trying to figure out what this means from a negotiation standpoint, especially as it relates to scatter pricing,” said Kaitlyn McInnis, executive director of investment at CrossMedia.
Impact on Pricing and Inventory
Some expect NBCU to try and raise the pricing floor on its streaming and linear TV inventory, particularly as it looks to fund expensive sports rights deals amid competition from streaming platforms. “Once the spinoff is complete (probably a year), there will be pressure for NBCUniversal to grow advertising and subscription revenue without the help of Comcast,” said Luke Moore, vice president and managing director, media partner at full-service agency FUSE Create, in an email. “This will likely push available inventory toward higher CPM media purchases, like addressable or data-heavy media products, and less focus on traditional linear TV.”
Other media agency executives were skeptical the split would restore NBCU’s leverage with advertisers. “They can try everything they want, they’re still in a competitive marketplace,” said Lisa Herdman, chief business integration officer at RPA.
With this year’s TV upfronts firmly in play, few buyers expect the split to disrupt negotiations. “I really don’t see it affecting this year’s upfront and I don’t necessarily see it impacting next year’s either,” said Horizon Media’s evp and head of investment Samantha Rose.
That could change by 2027, with an unbundled NBCU under pressure to find its footing. “Next year is really a different story, as that will likely be the first year they go into the upfronts as a standalone entity,” said Abby McNally, team director, connections strategy at Collective Measures.
Mixed Reactions from the Industry
“NBC has historically been a place where it’s been difficult to push for better rates. With this unbundling, I’d hope they might be more amenable to conversations with advertisers. I’m viewing it as a pro,” said McInnis.
Advertisers with existing long-term deals, such as presenting sponsor slots, are also unlikely to see changes, added Keynes’ Larkman. “Companies like NBC will protect advertisers at all costs,” he said.
Buyers looking further down the line sense danger, however. NBCU without its Comcast pairing could become an acquisition target for deep-pocketed streamers (Netflix, for instance, might consider another run at a major media acquisition).
One media buyer, who exchanged candor for anonymity, shared their “worst-case” scenario, in which NBCU’s custodianship of Olympic broadcasting rights was compromised by a split or merger with a larger entity. “If they cut back on coverage, that could ultimately impact what we’re planning or the reasons clients come on board for Olympic media buys,” said the buyer.
