Disney is in talks to sell ABC to Nexstar, Bloomberg first reported.
The move is the latest in Bob Iger's plan to slim down the House of Mouse and focus on streaming.
But even if he manages to sell the diminishing asset, challenges remain for the CEO.
September 15, 2023: This story has been updated to reflect Byron Allen's offer to purchase ABC.
Bob Iger continues to shake things up at the House of Mouse, and his next move could be selling the company's flagship broadcast network ABC, all but spelling out the end of the broadcast era as we know it.
Disney is in talks with Nexstar Media Group, the country's largest TV station owner, to sell the ABC network and stations, Bloomberg reported, citing people with knowledge of the discussions.
"While we are open to considering a variety of strategic options for our linear businesses, at this time The Walt Disney Company has made no decision with respect to the divestiture of ABC or any other property and any report to that effect is unfounded," a Disney spokesperson said in a statement responding to the report.
Hours later, another report came in from Bloomberg, this time saying media mogul and CEO of Allen Media Group Byron Allen had offered to buy ABC, as well as FX and National Geographic, for $10 billion.
The reported talks are another sign that Iger means business when it comes to Disney's streaming future.
The chief turned heads in July, when, at Sun Valley, he let it slip that anything is on the table for ABC.
"We have to be open-minded and objective about the future of those businesses," Iger said when asked about the possibility of selling networks ABC and FX. "They may not be core to Disney."
The remark shocked many and led to "high anxiety" within the company, CNN reported.
"None of this is surprising, given Disney is looking to unload non-core assets, and when a stock is under pressure as Disney has been, it needs to unload core assets and conserve capital, and this deal would be consistent with that," media M&A advisor Peter Csathy said of the reported talks.
The move to sell ABC is particularly meaningful coming from Iger. The Disney CEO's career started at the network, where he first worked on TV sets before moving up the ranks and eventually being named its chairman, and he's always been a champion of the division.
But the numbers just aren't there: For the first nine months of the year, Disney's linear networks, which include ABC, recorded an operating income of about $5 billion — down 27% from the same period last year. In its third quarter report, Disney specifically pointed to ABC's struggles, citing declining advertising revenue and average viewership.
Plus, the networks have proven a headache for the company, as recently demonstrated by Disney's battle over carriage fees with cable provider Charter.
Meanwhile, Disney's streaming income is on the rise. The company's direct-to-consumer business reported a loss of $2.2 billion in the first nine months of the year — 12% less than during the same period last year. Subscription revenue was up at both Hulu and Disney+ in the third quarter.
Directionally, the figures support Iger's decision to offload ABC and focus on streaming. But even if he does sell ABC — and manages to get a good price for it, despite its ominous future — his challenges are far from over.
First there's Hulu. Over the next few months, Iger is set to meet Brian Roberts at the negotiating table to purchase Comcast's stake in Hulu — but that won't come cheap. The plan is to integrate Hulu into Disney+, but neither platform is profitable, and figuring out how to keep them from bleeding billions is one of the biggest questions facing Iger. (How to get streamers to be profitable once the strike is settled and studios are paying more for content will be an even bigger predicament across Hollywood — and may mean execs like Iger have to give up some of their multimillion-dollar pay packages.)
Then, there's ESPN, which Iger doesn't seem keen on selling. While there's no arguing that sports are valuable, there are opposing viewpoints on the best way to distribute them to audiences. One idea is a direct-to-consumer streaming platform, though others say Disney should spin off ESPN into its own public company.
Selling ABC to Nexstar could be complicated, according to one of Bloomberg's sources, because the network shares many sports telecasts with ESPN. Nexstar, meanwhile, has been heavying up on sports programming. ABC TV's sports deals include "Monday Night Football," NBA Finals, NHL, and more. A sale of the network presumably would come with sports programming, to satisfy the sports rights holders, which want to ensure their programming reaches as large an audience as possible.
"It's a big part of the appeal of the ABC TV network now," an industry source with knowledge told Insider.
So, then, what does a deal to sell ABC mean? A lot of what we already knew: Linear TV is dying on the cord, streaming is a tougher business than Hollywood initially thought, and ESPN is a bit of a hot potato.
Basically, it's not a good time to be the leader of the Magic Kingdom.
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