Desperate Disney Could Look to Sell Off Large Assets to Market Competitors
What’s next in the everything-must-go-sale atmosphere at Disney?
Well, if reports are to be believed, the House of Mouse is looking to offload its owned-and-operated local ABC stations in eight markets — and if they do, the potential buyer sees “little friction” if they’re put on the market.
“We think there could be some opportunities depending on how things fall out,” said Tom Carter, a longtime executive with broadcast giant Nextstar who now serves as a senior adviser to the CEO and on the board of directors, according to industry publication Deadline.
“Disney had talked about it this way: ‘Let’s morph into a GrowthCo and a SustainableCo,’” Carter said when he was asked about the potential of Disney to sell off the stations at an investor conference in New York, the publication reported Wednesday.
“Disney CEO Bob Iger spurred talk of a potential sale of the eight stations over the summer when he said some of the company’s linear TV holdings ‘may not be core’ to the company in the future,” Deadline reported. (“Linear TV” is industry lingo for old-fashioned TV delivered via broadcast, cable and satellite.)
“Private equity firms are among those putting out feelers, given their sizable investments in local TV in recent years. Nexstar is a poster child for growth through [mergers and acquisitions], with Carter estimating that the company pulled off about 40 acquisitions in his first 10 years at the company. Multi-billion-dollar deals for Media General and Tribune Media vaulted what had been a boutique Texas firm two decades ago to the No. 1 spot among all U.S. station owners, and last fall it showed its appetite again by taking a majority stake in The CW.”
“The only issue is, the SustainCo is funding the GrowthCo, and if you sell one, you’ve lost access to that cash flow. Granted, you’re going to have proceeds, but is that really what you want to do?” Carter said.
As you can probably guess from context, “SustainCo” is jargon for a company with a series of assets that have limited upside but provide a predictable stream of revenue. “GrowthCo,” meanwhile, involves riskier assets with bigger rewards — streaming here would be the prime example, as Disney has leaned pretty heavily into its Disney+ offerings (with decidedly mixed results).
However, Carter said that if Disney wanted to fund growth through selling off sustainable, if not appreciating, assets, Nextstar would jump at the opportunity.
“I think you’ll see us take a look at it,” Carter said, noting the “massive” windfall the company had seen from previous deals.
However, there would be complications. The Federal Communications Commission has a cap of 39 percent station ownership by one company, and Nextstar is at that limit.
“But that would not preclude us from buying stations,” he said.
“ABC’s portfolio of stations is modest. It’s only eight, largely in the top 10 markets. We’re in eight of the top 10 markets already with a CW station. We could buy a second station in that market and not increase our household footprint. There may be a few stations that would require divestiture of either a Nexstar station or an ABC station, but we could onboard those with relatively little friction.”
Then there’s the issue of what programming would involve.
“You’re seeing ESPN simulcast a large portion of their sports telecasts on ABC. If you were to buy the ABC complex, how would that work going forward? There are a lot of questions that need to be answered,” Carter said.
However, the fact that Iger might be looking to pare down the company’s holdings by selling off iconic owned-and-operated stations like WABC-TV in New York City and KGO-TV in San Francisco shows how hard the returning CEO’s job has been.
In February, The Wall Street Journal reported that Iger, who had taken over for former CEO Bob Chapek after he was fired in 2022, was cutting 7,000 jobs and looking to shed $5.5 billion in costs.
“It’s time for another transformation,”Iger said at the time, with the Journal reporting Iger “said the changes would reshape the company around creativity, reduce expenses and lead to profits in its streaming business.”
The move came after several very expensive flops for the company’s animation division, which emphasized the company’s wokeness by shoving LGBT themes into parents’ faces; “Lightyear” and “Strange World” lost over a quarter of a billion dollars together.
Things haven’t been much better since, either. “Elemental” had the lowest opening for any Pixar movie in the Disney animation division’s history, and “Indiana Jones and the Dial of Destiny,” the company’s summer tentpole attraction, also failed to perform as expected.
As for ESPN, another Disney asset, the company has reportedly been looking for one or more of the major sports leagues it broadcasts to take a financial interest in the network. As for streaming, an August report revealed the company was using sneaky tactics — like premiering series meant for the Disney+ on other networks first — to fudge the numbers regarding just how much money they were losing on the service.
And, as for theme parks, attendance was down significantly over the early summer holidays, leading to speculation that part of the company’s portfolio was in serious trouble, too.
But then, in the year of the woke backlash, Disney has become to entertainment what Bud Light has become to beer. At least Bud Light’s brewers weren’t hemorrhaging cash before that; Disney is another matter.
At Disney, apparently, the fire sale continues unabated. It was an entirely predictable situation, given the company’s bad bets on wokeness and streaming content these past few years — and yet, I can’t help but feel sorry for the tears Mickey’s going to shed when he has to sell off Pluto. Cheer up, though: Maybe Nextstar will let the poor, penurious mouse have a visit with his ol’ pooch every now and again.
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