What is the future of NBC's Golf Channel? Comcast's announcement raises questions

Welcome back to another extended edition of the Hot Mic Newsletter, A weekly GOLF post covering all things golf from me, James Colgan. This week's newsletter headline is a surprise earnings call announcement from NBC/Golf Channel owner Comcast. As always, if you'd like to be the first to receive exclusive information like this directly from me, click link here to subscribe to our for free send a newsletter. But first, we return the phone lines to Comcast's latest revenue call.

BIG COMCAST NEWS

In an earnings call Thursday, Comcast president Mike Cavanagh dropped some shocking news: The telecommunications giant is considering spinning off its networks into a new, publicly traded company. (NBC, the broadcast network instead of cable, will not be part of the spinoff.)

The decision comes amid several simultaneous developments for revenue-focused Comcast, whose media empire includes the entire NBCUniversal suite and several associated cable networks, including the Golf Channel. The first development is that Comcast's long-term media growth is in broadcast, not cable television. The second development is that Comcast is hoping to invest more in Peacock, perhaps even partnering with another broadcaster (hello, Paramount!) to strengthen its broadcast landscape, and such a deal would be expensive. And the third development is the cable TV business, which is at its best in a recession, and at its worst in the early to mid-cycle stages of death.

(Without going too deep into the cable-TV problem: broadcasting has caused more consumers to cut the cord, which has resulted in fewer cable TV viewers, which has resulted in fewer advertising dollars for cable TV and, most importantly, less “cart money” for providers on the networks – all of this (which caused cable network revenues to decline and the cable TV industry as a whole to begin to slowly collapse.)

Considering all of this — and Comcast CEO Brain Roberts' heavy emphasis on profitable businesses — Comcast appears to be divesting its media business from cable networks. The spinoff company would allow Comcast to spin off its cable networks, reduce the risk of a slow-growing business in Comcast's large business portfolio and position Comcast to raise capital by selling equity in the new company to outside investors.

Although Golf Channel has not been specifically mentioned as part of a potential spinoff, it is 1) a cable network and 2) owned by Comcast. But the spinoff proposal raises a set of questions for Comcast and Golf Channel, as…

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IS A GOLF STATION WORTH ESTABLISHING?

If Comcast's decision is driven by the collapse of the cable TV market, then it certainly understands the value of live sports programming, which is the ultimate business base for making money on cable TV. Even today, cable networks like ESPN and TNT have kept their businesses afloat because of the generous audiences their live sports properties have achieved. (One quick aside: a bigger, more stable audience equals better advertising dollars and bigger cart fees from suppliers, which equals a healthier business.)

Considering Comcast's obsession with profitable businesses, and Golf Channel's position as a cable network with regular live sports, is it wise to shut down Golf Channel and the many hours of live golf programming it produces annually? I suspect the answer lies somewhere deep in an Excel spreadsheet.

WHAT HAPPENED TO THE PGA TOUR DEAL?

We can safely say that NBC/Comcast is still holding on to the $400ish million a year commitment to the PGA Tour through the end of the decade, even if the spinoff happens. This is because it is a good chunk value of the PGA Tour/NBC deal is tied to NBC's weekend national broadcast windows, with a much smaller portion tied to Golf Channel's remaining hours of tour coverage. It's hard to see that deal changing to equity under the ownership of a new (or renovated) golf course.

WHAT HAPPENS TO A SPINOFF COMPANY AFTER CREATION?

Right now no one knows, because the spinoff doesn't exist. But Cavanagh indicated that Comcast intends for the new company to be “well-funded” — indicating that Comcast may be considering outside investors for equity.

Does the spin-off eventually lead to the sale of NBC's cable network assets, including the Golf Channel? Would Comcast accept the godfather's offer for every outbound company? These options could fundamentally change the long-term vision of the Golf Channel.

CAN THE PGA TOUR SAVE THE GOLF CHANNEL?

This is just speculation, and it's still a long shot, but we've heard rumblings about the PGA Tour taking an equity stake in Golf Channel, if not full control, for years.

On the other hand, it makes sense for the Tour to keep the sports cable network alive, especially given how many hours of programming the Golf Channel absorbs each year, and the number of studio shows like Live From in a major golf product. On the other hand, there is a business reason why NBC is considering releasing its cable networks in the first place.

One (stupid) argument in favor: The Tour won't have to change much of the brand. In 2022, the Golf Channel logo was again allowed to include an homage to the PGA Tour logo.