Earlier this summer, Disney CEO Bob Iger spoke in an interview with CNBC about how linear television maybe no longer be a core business for the company, which is focusing on theatrical releases, streaming and its theme park resort business.
Earlier this month, it was revealed that Byron Allen’s Media Group had put in a $10 billion offer to buy Walt Disney’s ABC Television network and assets, including the FX and National Geographic cable channels. There have also been reports that Disney has been in talks with Nexstar about potentially selling some linear channels.
Following these reports coming to light, Disney issued a statement about a potential sale of ABC and its linear business:
“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.”
This past week, Byron Allen took part in a Q&A session at the Code conference in Laguna Niguel, California, where he spoke about his offer for some of Disney’s linear networks and said that while Bob Iger has said that linear TV “may not be core” to the company, it “is not ready” yet to enter a formal process to sell those assets.
Byron Allen also revealed that former Disney executives, Kevin Mayer and Tom Staggs, who run Candle Media, are also advising Bob Iger on his options with linear television, saying:
“These legacy companies are trying to reinvent themselves. It’s like they’re trying to build a new airplane mid-air while they’re flying their old airplane, in a publicly traded entity. This is a very challenging thing to accomplish. Bob is excellent at what he does, he’s phenomenal, he’s the best person to do it, but whoa, they’re asking him to do something that has not occurred in the last 100 years.”
With Disney’s recent move to reduce the number of linear channels to Spectrum cable customers and getting ready to merge Hulu content into Disney+, following its purchase of Comcast’s stake in Hulu, Disney is trying to work out its options. Allen spoke about how difficult this is for the studios,
“How do you de-couple it? How do you pull it out of their ecosystem? Because it’s really integrated into everything Disney. That’s the hard part.”
Byron Allen is still hoping that he is able to make a deal with Disney for those linear channels, adding that “I’m going to chase it down like a lion chasing a gazelle.” He also explained how he has been “stalking Disney for a while.”
One of the biggest issues facing Nexstar with regard to the purchase of linear channels, is that there are federal laws in place that restrict companies from not owning more channels that reach 39% of US households, which, according to Allen, Nexstar is already at, while his media company isn’t.
“Washington, DC has made it very clear they’re not interested in private equity and hedge funds buying this type of asset, a national news service, and operating it. DC is not impressed with the way private equity and hedge funds handled newspapers and accelerated their demise. So, good luck going in there and buying platforms that deliver 80% of the news to America.”
Disney has many options with its linear channels. It could sell off the eight local ABC stations, which are valued at over $3 billion, but maintain the ABC Network. One big issue with Disney completely selling off the ABC Network, is they have lots of deals tied up with sports rights that require a certain percentage of games to be shown on broadcast television for more reach.
With streaming becoming the most common way people watch Disney content and with the traditional cable television system becoming less important, Disney, along with many of the other legacy companies, are looking at how to manage the transition best. Bob Iger has to make some decisions about the company’s future in linear television. But its likely some or all of those linear channel assets will eventually be sold as Disney prepare for a streaming future.
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Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom.