Whirlwind of Questions About NBCUniversals Future After Shocking CEO Firings

Whirlwind of Questions About NBCUniversals Future After Shocking CEO Firings

After the abrupt Sunday ouster of NBCUniversals CEO Jeff Shell, the company’s successor, at least for now, has begun to settle into the job.

Mr. Shell’s replacement, Mike Cavanagh, the president of Comcast, who is NBCUniversalsparent, was sent from Philadelphia to NBCUniversals headquarters at 30 Rockefeller Plaza this week to meet with dozens of top executives. Mr Cavanagh also visited the set of the Today show, contacted news anchors such as Lester Holt and met with late night presenters Jimmy Fallon and Seth Meyers.

But if Mr. Cavanagh moves into the job permanently, or Comcast eventually picks someone else for the position, the new leader will head a company that is the subject of constant rumors and speculation about its future direction, including questions like:

Will Brian Roberts, the CEO of Comcast, combine NBCUniversal with another company, an option he has previously explored?

Will Mr. Roberts pursue a sale or outright acquisition of the Hulu streaming service, which NBCUniversal co-owns with Disney?

And will the NBC broadcast network give up an hour of its primetime lineup and hand it over to local affiliates, or enter broadcast rights talks for the National Basketball Association?

NBCUniversal is far from in dire straits. It’s home to legendary institutions like Saturday Night Live and Today, as well as lucrative franchises like Despicable Me and The Real Housewives. It generated $39 billion in revenue last year, a 14% increase over the previous year.

But the company also owns several cable networks like USA and Bravo that are hemorrhaging viewers. Its streaming service, Peacock, is growing rapidly but still has far fewer subscribers than many of its competitors and is projected to lose $3 billion this year.

These issues, which had been looming for months, were brought to the fore after Mr. Shell’s sudden departure. Comcast announced Sunday that Mr. Shell would be leaving the company after an investigation into a complaint of inappropriate conduct.

Her exit came after Hadley Gamble, a senior international correspondent at CNBC, filed an internal complaint raising allegations of sexual harassment and sex discrimination, according to her attorney, Suzanne McKie. Comcast executives have launched an investigation after Ms. Gamble filed the complaint in late March. On Monday, the company said in a statement that Mr Shell had been fired after an investigation corroborated the sexual harassment allegations.

Mr Roberts and Mr Cavanagh met with Mr Shell at the offices of a law firm in Philadelphia on Friday and told Mr Shell he would be fired, according to two people familiar with the internal discussions who were not authorized to speak publicly.

Mr. Shell was taken aback by the sudden turn of events. He had met with lawmakers in Washington, DC, in the days leading up to his firing, planning to attend the White House Correspondents’ Association dinner on Saturday, according to two people familiar with the matter. He hired a high-profile crisis communications expert, Risa Heller, and a well-known lawyer.

Mr Shell declined to comment on the circumstances of his departure but said in a statement he was deeply disturbed by the pain and embarrassment I have brought to my family.

I focus solely on making amends, Mr Shell said.

Comcast is still investigating elements of Ms. Gamble’s complaint related to sex discrimination, according to two people familiar with the investigation.

Comcast declined to comment on the investigation. Regarding the future of Comcast’s leadership, a spokeswoman referred to the New York Times remarks made by Mr. Roberts in Thursday’s first-quarter earnings call, calling Mr. Cavanagh a fantastic executive and operator.

Mr. Roberts has sought to reassure investors of Mr. Shells’ departure. On Thursday’s earnings call, he released a brief statement in support of Mr. Cavanagh and NBCUniversals executives. He praised the bench of veteran NBCUniversals leaders and said Mr. Cavanagh would take over the helm of the company while remaining Comcast chairman after a difficult time.

Comcast’s stock price is up about 10 percent after the company’s earnings call Thursday.

In a show of support, Mr. Roberts joined Mr. Cavanagh in New York for the NBCUniversals executive committee meeting, which Mr. Shell used to head up, according to three people familiar with the gathering. During the meeting, Mr Cavanagh reassured the assembled leaders that he would be there for the foreseeable future. Next week, Mr. Cavanagh is expected to travel to Los Angeles to meet with West Coast executives.

There is a consensus among NBCUniversal executives that Mr. Shell’s departure will not greatly affect the company’s television, film and news assets in the near term. Mr. Shells’ major decisions needed the approval of Mr. Cavanagh and Mr. Roberts, who have the final say on the big issues facing the company. I don’t think the business is going to miss a beat, Mr. Cavanagh said on the earnings call.

Even if Mr. Cavanagh has taken the reins, he’s unlikely to relinquish responsibilities across Comcast’s broader empire, which includes its cable and wireless businesses.

It is widely believed that Mr Cavanagh is the most likely internal candidate to succeed Mr Roberts. A full-time job that only runs NBCUniversal would sort of be a demotion. He is the only president in company history who does not belong to the Roberts family, which controls Comcast.

However, some NBCUniversal executives think media assets need a dedicated leader. There are too many decisions to be made in a wide variety of businesses, including theme parks, movie studios, and TV shows, as well as more existential decisions to be made for this to be a part-time job for anyone.

Mr. Cavanagh believes Comcast has a stronger hand than many of its competitors in the media industry, including Disney and Warner Bros. Discovery. Profits from Comcast’s broadband and wireless businesses insulate the company somewhat from the ad sales slump affecting many of its peers, giving it cash to invest in streaming.

And the businesses of the NBCUniversals movie studios and theme parks are growing, with recent highlights including the opening of Super Nintendo World at Universal Studios and the release of The Super Mario Bros. Movie, which was a box office hit . Comcast on Thursday said its profits rose slightly in the first quarter, despite a decline in ad revenue and slower growth in its broadband business.

Speculation that Mr. Roberts and Mr. Cavanagh could spin off NBCUniversal has swirled for months, fueled by reports last year that they considered merging the company with video game studio Electronic Arts. With many of NBCUniversals’ rivals teaming up to bolster their streaming businesses, some analysts have speculated that Mr. Roberts and Mr. Cavanagh are looking for another big deal.

One potential target analysts are discussing is Warner Bros. Discovery, the new media behemoth created by the merger of WarnerMedia, which owns HBO and the Warner Bros. movie studio, and Discovery, which owns cable networks like HGTV and TLC.

Craig Moffett, senior managing director at research firm SVB MoffettNathanson, said such a deal could give the combined company enough clout to pay for all the movies and TV shows it wins enough subscribers to make the service profitable. But most Comcast investors hate that idea, he added.

I think Mike will inevitably put his stamp on the business, Mr. Moffett said, and in this case that inevitably means a role for mergers and acquisitions or divestitures.

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