Last Friday, when I saw Comcast’s “record date” for the spin-off, I moved my Saturday and Sunday tasks and spent the whole weekend researching and building forecasts for Comcast and Versant after the split.
What amazes me about this spin-off is how little attention it gets, because I think it is very important:
- Unlocks value: Comcast now trades at silly multiples (6–7 P/E or even lower). The market prices it like a simple TV channel, but it is really a huge group: about 70 % of sales come from mobile phone service (same as T-Mobile or AT&T). The rest is what they call Platform & Media, which also includes parks like Universal and Epic. In the last quarter these parks gave that segment a big boost.
- Forced selling: I believe Versant will be the asset nobody wants. That makes sense: it is in a shrinking industry. A few days after the spin-off this could push Versant to a very, very attractive price.
The second point is less important, because the real story is the value that Comcast will unlock. You can play it twice: buy before the spin-off and you almost get a free share; buy after and you can pick up Versant cheap.
Let’s go back and explain what Comcast is. Comcast is a global media and technology company. It gives customers connectivity and platforms, and it also creates content and experiences for people around the world. Its work is split into two main parts: Connectivity & Platforms and Content & Experience.
- Connectivity & Platforms
This part focuses on broadband, wireless, video and voice. It uses brands such as Xfinity, Comcast Business, Sky and NOW in the U.S., U.K. and Italy. It is the financial base of the company, driven by steady broadband money and the growth of wireless service (Xfinity Mobile). Managers call this plan “convergence”. - Content & Experience
This part covers media and entertainment. It produces and sends out content through NBC, Telemundo, Universal, Peacock and Sky. It also owns and runs the Universal theme parks, including the new Epic Universe park in Orlando (set to open in May 2025).
Spin-off of Versant
In November 2024 Comcast said it will spin off most of its cable-TV networks and related digital platforms into a new, stand-alone public company called Versant Media Group. The board believes this move is best for the corporation and its shareholders. Comcast can now focus on growing businesses—broadband, wireless, streaming and theme parks—and it lowers the pressure from falling linear-TV revenue. In short, the company drops a toxic segment.
Is Comcast a super-growth firm? No, but it is a cash machine.
In the Excel file I share below you can see a simple three-statement forecast, a discounted-cash-flow model and a Sum-of-the-Parts for both Comcast and Versant.
After pro-forma adjustments I get a fair value for Versant of about $50, or 1× price-to-book. I doubt it will really trade at 1 P/B, given the industry; maybe in an election year like this one, but I would not count on it.
For Comcast I assume 1.5 % growth. With a DCF I get a value above $40; with a SOTP I get $37. I then apply a 33 % discount to all final numbers because of the dual-class structure: the non-traded Class B shares hold that much voting power. I feel it is wise to add this discount and to give myself a safety margin. Without the discount the targets would be $50–$60.
The forecasts are basic: I did not add big changes in working capital or capex. Comcast is a mature, low-growth company.
I hope you enjoy the model. My position in this trade is large, because I think Versant shares will be “free money” for Comcast shareholders. We will see how Versant trades, but Comcast itself looks like a sleeping valuation giant.
