The Walt Disney Company is considering selling ABC and its affiliates, linear cable networks, and a minority stake in ESPN. While the motivation behind these potential sales is not solely financial, they would help Disney reduce its debt and adapt to the changing media landscape.
Disney is signaling to investors that it is ready to move away from traditional TV and embrace new digital platforms. With streaming as its future, Disney aims to strengthen its position as a leader in the industry. Selling off declining assets would allow the company to focus on its strongest assets, such as streaming services and theme parks.
Declining values
The value of broadcast and cable networks has significantly declined in recent years due to cord-cutting. ABC and Disney’s owned affiliate networks are currently valued at about $4.5 billion, a far cry from the $19 billion Disney paid for Capital Cities/ABC in 1995. ESPN’s valuation has also decreased from around $50 billion to approximately $30 billion.
However, Disney intends to retain a majority stake in ESPN, as it remains a valuable asset in the sports media business. The shift towards streaming does not diminish the importance of a large broadcast network for major sports leagues.
Selling ABC
Selling ABC would be a bold move by Disney, indicating its belief that the future of content distribution lies outside traditional broadcast cable. However, this decision could have implications for ESPN’s ability to secure future sports rights deals and may necessitate rewriting existing agreements with pay TV operators and leagues.
The way forward
If Disney successfully sells ABC and investors respond positively, it could inspire other legacy media companies, such as NBCUniversal, Paramount Global, and Warner Bros. Discovery, to divest their declining assets as well. Disney has the opportunity to lead the industry by embracing change and leveraging its strengths in the evolving media landscape.
– CNBC’s Lillian Rizzo contributed to this article.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
WATCH: Nexstar could ‘no doubt’ take ABC and monetize it really well, says Wells Fargo analyst
