In a significant move that is sending ripples through the media industry, former Disney CEO Bob Iger has reportedly declared roughly a third of the company up for sale, according to a recent Bloomberg Business report. The announcement was made during a controversial CNBC interview, where Iger faced criticism for allegedly making false claims about Disney’s approach to content.
By labeling its cable and broadcast TV assets as “noncore,” Iger effectively put ABC TV, FX cable networks, National Geographic, and Freeform on the selling block. The report estimates that these media networks contributed a substantial 35% ($24.8 billion) of Disney’s total revenue and over 50% ($7.5 billion) of its operating income.
The driving force behind this major sell-off appears to be the ongoing shift in consumer preferences towards streaming services. As cable and satellite TV lose ground, more and more viewers are turning to affordable or free streaming platforms like Pluto TV, FreeVee, and Tubi. Over the years, cable TV has been perceived as an expensive service where consumers paid for numerous channels they rarely watched, resulting in significant profits for media corporations like Disney.
However, the advent of streaming has upended this model, compelling companies like Disney to compete on merit rather than relying on cable subscriptions. The company’s streaming platform, Disney+, has seen substantial success but has incurred significant losses in the process.
Bloomberg predicts that the potential sale of these fading cable and broadcast networks may fetch around $8 billion, acknowledging that whoever purchases them will likely have a limited window of opportunity to extract profits.
With all of the talk about Disney selling their linear television assets after Bob Iger’s interview on CNBC, I thought I would put together an overview of this division for The Walt Disney Company.
This includes the networks and channels, not the studios or streaming services. pic.twitter.com/pYq9EsNqB7— SeanNyberg (@SeanNyberg) July 18, 2023
The report warns that Iger’s decision could unsettle industry peers, particularly companies like Paramount Global and Warner Bros Discovery Inc., which still heavily rely on shrinking cable networks for most of their profits.
However, the report also highlights that Iger seems determined to protect Disney’s most valuable acquisitions, such as LucasFilm, Marvel, Pixar, and Fox, which were purchased before his tenure as CEO. These assets are perceived to be worth far less than what Disney paid for them, which could potentially expose Iger as a poor negotiator and raise doubts about Disney’s overall valuation.
Despite the challenges Disney faces, the board decided to extend Iger’s contract into 2026. The company’s creative output has been a subject of criticism, with some attributing the decline in Star Wars, Indiana Jones, Pixar, and Marvel to Disney’s emphasis on identity politics and alleged sexualization.
As Disney undergoes a transformative phase, industry experts are closely monitoring the implications of Iger’s strategic moves and the impact of streaming on the entertainment landscape. Whether these measures will pave the way for a new era of success or further exacerbate Disney’s woes remains to be seen.
