NBCUniversal CEO Jeff Shell Fired With Cause Over Harassment Claim, Comcast Says
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Comcast unveiled a shock change atop its entertainment arm NBCUniversal on Sunday, putting in charge trusted corporate executive Mike Cavanagh to replace NBCU CEO Jeff Shell.
In a Monday regulatory filing, the company detailed that Shell had engaged in “inappropriate conduct with a female employee, including allegations of sexual harassment,” leading it to retain outside counsel to investigate. “Evidence was uncovered that corroborated the allegations,” the filing highlighted. As a consequence, Comcast “terminated Mr. Shell’s employment with cause,” meaning he won’t have right to severance pay, with immediate effect.
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Attorney Suzanne McKie of Farore Law said that her client, CNBC journalist Hadley Gamble, made a complaint against Shell that sparked an investigation. “The investigation into Mr. Shell arose from a complaint by my client of sexual harassment and sex discrimination,” the lawyer said in a statement. “Given these circumstances, it is very disappointing that my client’s name has been released and her privacy violated.”
Shell’s departure brings up questions about who will take over as his permanent successor and how they will handle questions such as the future ownership of Hulu (of which Comcast is a minority owner) and the fate of NBCUniversal’s burgeoning streaming service, Peacock, which had long been shepherded by Shell
That focus will turn to Cavanagh, who quickly became a trusted right hand to Comcast chairman and CEO Brian Roberts after joining the conglomerate as CFO in 2015 following a career in banking. Known as a strong operator, the executive so far does not have a big profile in Hollywood, but he has long signed off on budgets and strategy of NBCU top brass and spoken in detail and with much knowledge about NBCU and other Comcast business units, their opportunities and challenges, whether on earnings calls or at investor conferences. Giving him further exposure in the entertainment world by supervising NBCU could cement his standing as the man seen as a likely successor to Roberts down the line.
Company insiders and Wall Street observers also see Cavanagh as a confident, and likely longer-term, leader for the entertainment unit. The exec is “a very competent no-nonsense leader,” Pivotal Research Group analyst Jeff Wlodarczak says.
“Cavanagh is highly regarded and reputationally more deliberate in his decision-making than Shell, as evidenced by his installment as Comcast president last fall,” Benchmark analyst Matt Harrigan wrote in a report. “We would not infer anything incrementally negative relating to NBCUniversal and do not detect any urgency in naming a Shell successor.”
Comcast has signaled that it was in no rush to pick a successor for Shell at the top of NBCU, given that Cavanagh is seen as able to oversee the entertainment arm in addition to his Comcast president role and given the fact that NBCU has accomplished leaders running its various businesses.
Still, Wall Street mentioned key top brass and direct reports of Cavanagh’s as possible contenders for the top NBCU job down the line, including NBCU Television & Streaming head Mark Lazarus, Universal Filmed Entertainment chair Donna Langley, Pearlena Igbokwe, chair of Universal Studios Group, Mark Woodbury, head of Universal Destinations & Experiences, and Linda Yaccarino, head of global advertising and partnerships.
“A list of internal replacements could include Mark Lazarus (NBCU TV and streaming), Donna Langley (theatrical) and Cesar Conde (NBCU News),” Wells Fargo’s Steven Cahall said in a note to investors, “though there are good execs outside Comcast.”
Cavanagh has been on a trajectory that has made him a potential eventual successor to Roberts. His dual role at the corporate parent and supervision of NBCU is somewhat similar to how trusted Roberts lieutenant Steve Burke, before his departure in 2020, served as head of NBCU and Comcast corporate executive vp, making him an heir apparent.
The exec change comes at a critical point for NBCU’s streaming service, Peacock. Shell started at NBCU in January 2020 and had been with the streaming service since its early days (it soft-launched on April 15, 2020, and then launched nationally on July 15 of that year) and helped shepherd its growth.
Comcast and NBCU have been more evolutionary than revolutionary in their approach to the streaming business. For the most part, Comcast has been taking a “mature” approach to “balancing streaming with preserving linear network and licensing economics,” Harrigan analyzed. But “Shell was regarded as being especially aggressive on investing in Peacock as video consumption gravitates increasingly to streaming,” including in sports and news, he said.
Shell had been a big proponent of collapsing theatrical windows, in favor of moving content to video on demand. NBCUniversal later followed his lead with a historic deal with theater owners that allowed movies to become available on premium VOD as short as 17 days after their release on the big screen.
While the streamer has a smaller number of subscribers than giants such as Netflix and Disney+ (with 231 million and 164 million paid subscribers at the end of their respective fourth quarters), it has been steadily gaining more share and helped offset advertising weakness coming from the linear network, thanks to its ad-supported tier.
At the end of its third quarter, Comcast CEO Brian Roberts said Peacock had more than 15 million paid subscribers. That number hit 18 million in early December, Shell said at the time, and then climbed to more than 20 million at the end of 2022, marking its strongest quarterly gain yet. Comcast is scheduled to report first-quarter earnings Thursday, providing an update on those figures.
While losses have been mounting for the streaming service, hitting $2.5 billion in 2022, the next few years, now sans Shell, are expected to be pivotal. Management has been highlighting 2023 as its year of peak losses, at around $3 billion (Disney has also promised 2023 will be its year of peak losses for its streaming services.) After that, Shell has promised that Peacock will generate a return for investors.
“We’ve been clear from the start that we’re going to see a return on investment. I think we feel better on that now based on where we are,” Shell said on the company’s earnings call in January.
Shell also departs before parent company Comcast has to answer the key question of what to do with its stake in Hulu, which could also impact the fate of Peacock, if it retains control, or provide a multimillion-dollar cash infusion to Comcast if it sells.
The executive had been “integral to reworking NBCUniversal’s Hulu arrangement with Disney and removing more NBC content in favor of placement on Peacock,” Harrigan said.
Disney has a two-thirds stake in Hulu, while Comcast owns a third. Starting in January 2024, Comcast can use a put option to require Disney to take over its stake, while Disney can tell Comcast to sell its stake.
Disney had long-signaled that it would buy out Comcast, and Comcast appeared poised to sell — that is, until Roberts suggested in fall 2022 that his company may be interested in Hulu: “It has wonderful content, and I believe if it was for sale, put up for sale, Comcast would be interested — and so would a lot of other tech and media companies,” he said.
While Bob Chapek had wanted to take over Hulu even sooner, returning Disney CEO Bob Iger has recently suggested he’s exploring a possible sale of the business. The company is “studying the business very, very carefully,” Iger said in March, as the executive moves Disney away from general entertainment and conducts other cost-cutting measures across the company.
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