Here’s an example of how messy things are in Hollywood these days: Disney CEO Bob Iger’s recent remarks that the company’s linear TV assets “may not be core” to its business were buried under the influence of his comments that SAG-AFTRA and the WGA weren’t “realistic” in contract negotiations last week.
But now that a little bit of the dust has settled from the initial double whammy, sources inside and outside Disney are wondering what reaction Iger was looking to provoke by announcing Disney’s intent to be “open and objective about the future of those companies,” which includes broadcast network ABC as well as FX cable, Disney Channel, Nat Geo and Freeform, among others. (Not ESPN, which is run by Jimmy Pittaro under a separate division of the Disney business from its other television and streaming assets.)
Does he mean all line businesses or just some of the cable networks? Does he mean ABC and ABC stations? That part wasn’t clear, said Jessica Reeve Ehrlich, media and entertainment analyst at Bank of America Securities. diverse. “I’m not sure what he meant exactly, whether it was a complete disposal or some kind of different structure — but he was saying the obvious, which means the business is incredibly challenging on a secular basis. But it’s probably more passive than I expected because radio has been around for over 100 years, but it’s still there. Wen sub-losses daily.”
It’s worth noting that Iger’s comments come amid ABC’s summer primetime ratings win. Currently, the Disney-owned streaming station is the highest-rated network in both adults 18-49 (0.6) and average total viewership (3.2 million) based on Nielsen data from May 25 to July 9. In comparison, NBC has a rating of 0.4 and averages 2.94 million viewers, Fox has 0.3 and 1.6 million viewers, and CBS has 0.2 and 2.86 million viewers.
At an off-site meeting of Disney Television executives led by Disney Entertainment co-president Dana Walden on July 18 — a meeting that had been planned since mid-June and was not scheduled in response to Iger’s headline-grabbing interview with CNBC on July 12 — the Disney CEO addressed his remarks.
He said linearity and news are very important to the company. He was very honest about that piece, said a Disney insider, and said we just have to be mindful about future business and that we’ll take it on.
The source added: “Off site, it was something that was addressed immediately by all of our leadership the day he said it.” “We were all like, we can’t keep our heads in the sand about linear valuations. … He never said he was going to sell it — he said it might not be the core of the business. But what he said and what he said over and over again is that content is 100% the core of our business.
Disney TV staff recently considered where the “best content” would live when Disney+ launched in November 2019, this source says, and “we’ve put up with it.” “Now, we have to figure out what the next iteration of that is? And everyone is having honest conversations about what that looks like.”
But that still leaves many questions about how Disney evaded its existing assets. ABC’s eight owned-and-operated television stations are beachfront estates home to powerful local news leaders in the nation’s three largest television markets: New York, Los Angeles, and Chicago. Television stations still make a lot of money – though not as much as they once did – which makes them attractive to financial buyers. But it doesn’t make sense to sell the O&Os while keeping ABC.
“Who would be in a position to buy ABC and the TV stations without piling more debt on their already heavily indebted balance sheets?” A source in the group’s TV station said. “So maybe it was an unintentional mistake on Iger’s part. I’m not sure on his account, maybe he knew what he was doing all along, if he was trying to prime the market and his staff for a final change in the real world.”
Another source noted that although Iger has been supportive of ABC throughout his first and second terms as CEO, from the moment Apple struck its first software deal in 2005 with Disney for “Desperate Housewives,” “Lost” and other shows as a pioneer in the iPod download model, the tech giant has been rumored as a potential buyer for the Mouse House. Now that Iger is back (after briefly ousting his successor CEO Bob Chbeck) and trying to cut costs and boost profits where possible, the deal that offloads ABC and other line assets removes several things from Iger’s plate that focus on broadcast and parks simultaneously.
“Do [Iger] Does he mean what he says or is he just talking to Wall Street? What does Disney look like even without its line work? said one agency partner. “Maybe he was just trying to make them look like a good acquisition target. He promises to give away these particular assets and then set them up to be acquired by someone like Apple.”
With Disney’s upcoming quarterly earnings announced on August 9, Iger will likely come under pressure from Wall Street analysts to expand on his comments. He’ll certainly be pushed to get more details on how he thinks about linear assets as well as the overall state of Disney amid the ongoing SAG-AFTRA/WGA double whammy.
An executive at rival station ABC said, “It looks like Bob may have got a little more he can chew and may have too many non-quote kids under his banner.”
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