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Comcast's "Portfolio Reconstruction" Meets the Reverse Information Paradox
Why Satya Nadella's AI Warning Changes the Road Ahead for NBCUniversal and Disney
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Two years ago, I wrote about “portfolio reconstruction” as a strategy for large media companies to pursue in response to technological disruption:
“The premise is that if management cannot optimize shareholder value across unrelated assets, then they should either discard those assets or find managers who do understand how to connect them in ways that audiences want.”
The “point” of “portfolio reconstruction” is “not only that the corporate structure of cable bundles no longer matters. It is that the entire corporate entity needs to be rethought.”
Comcast is now pursuing its version of portfolio reconstruction. First, on January 2nd it spun off some cable networks into Versant. The recently announced spin-off of NBCUniversal was its second move. It was the first explicit admission by a large legacy media company that bundling scale-driven and IP-driven businesses under one roof cannot create value in the AI era.
There will soon be three different business models solving three problems related in origin but increasingly unrelated in practice. The paths forward for Versant and Comcast are straightforward: the former can ride out the slow but profitable decline of cable and the latter is a broadband, wireless and entertainment platforms business serving more than 65 million homes and businesses.
Two weeks ago I argued that the best path forward for NBCUniversal is its own version of “portfolio reconstruction”: It should pursue a partnership with a cloud company. This would enable NBCUniversal to license its IP to generative AI users via subscription or per use fees, and also to brands and merchandisers that can quickly produce new long-tail ideas from its library of IP. It also would emulate the Ellison family’s model for Paramount Skydance and Oracle Cloud Infrastructure, but at a smaller scale and without the family control.
A post on X yesterday from Microsoft CEO Satya Nadella directly challenged this recommendation: “In the AI age, the buyer risks giving away knowledge, just in order to use what they bought.”
He adds: “You essentially pay for intelligence twice, once with money, and again with something even more valuable: the proprietary knowledge you must reveal to make that intelligence useful. The better you want the model to perform, the more of that knowledge you have to feed it!”
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Past essays related to today’s analysis:
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