Bob Iger: Disney could sell ABC, other cable networks

Iger’s possible move could have implications for local and network TV

In an interview with CNBC Thursday morning, Walt Disney Co. CEO Bob Iger from a financial conference from the side of the road in red-state Idaho stunned observers saying he is open to selling ABC and its non-sports cable networks such as FX and Freeform as they “may not be core to the company” – despite the fact ABC’s owned-and-operated stations are basically the strongest station group and revenue leaders in the country, thanks to its dominance of its stations in big markets, such as ABC 7 (WLS-TV) in Chicago and in New York and Los Angeles. 

But this may not be enough as linear TV platforms have been on the decline for quite sometime, reducing the value of both the broadcast stations and cable networks. Disney is in the process of laying off 7,000 workers amid fears of a recession, the ratings downturn of linear TV, slowing sign-up streaming subscription numbers, and cord cutting, which is impacting ESPN – which Iger is not selling but looking for “strategic partnerships” with other media companies.

Iger, who was once entertainment president of ABC in the 1990s when the network was riding high on hits Roseanne, Home Improvement, and NYPD Blue, was elevated to CEO in 2000. Disney has owned ABC since 1996 – a year after the financial interest and syndication rules expired, axed by the government in 1993 as the 25 year-old decree prevented studios from buying broadcast television networks. This paved the way for consolidation among both, with Viacom (who bought Paramount in 1994) re-purchasing CBS in 1999 and NBC and Universal Studios merging in 2004, and both being swallowed by Comcast in 2011. 

ABC owns local stations in eight markets – in addition to ABC 7 in the nation’s third-largest market, ABC owns WABC New York (the largest), followed by KABC Los Angeles (2nd), WPVI Philadelphia (4th), KTRK Houston (7th), KGO San Francisco (10th), WTVD Raleigh-Durham (23rd), and KFSN Fresno (53rd). While most lead in news ratings and revenue in their respective markets, all but two are located in “blue” cities and “blue” states, places where residents are leaving in droves, Chicago included – reducing potential advertising revenue. Only one station is in a political swing state (North Carolina), where Nexstar and Sinclair used the strategy of buying stations in these places to maximize political revenue. Since 1986 when ABC merged with Capital Cities, the network bought only two stations (rust-belt markets WJRT Flint and WTVG Toledo) only to sell them several years later.

“DirecTV was sold, and private equity is involved in linear TV broadcast,” Wells Fargo analyst Steven Cahall wrote in a note. “In other words, the future of ABC or Freeform could be similar to that of newspapers, where private equity and hedge funds scoop up declining but cashflow-rich businesses, and figure out a way to maintain margins.” In my words, ABC’s success on the local level is no longer impressing Wall Street. But any kind of dance with hedge funds and private equity groups would likely run into resistance with federal regulators as the FCC recently blocked Standard General’s purchase of Tegna. 

Iger could also run into trouble on the government front if he sells to an existing broadcast group. With the ownership cap at 39 percent of the U.S., many of these already own large-market stations gobbling up coverage and there is an FCC rule stating no company can own two of the top four-rated stations in the country (ABC’s eight stations cover 20 percent of the U.S.) Since Iger – who returned to the CEO role last year after two years away – had his contract extended through 2026, now has plenty of time to work on electing a Republican administration into Capitol Hill in 2024 in order to achieve his goals since they are far more open to deregulation than Democrats and have the FCC raise the cap or eliminate ownership rules altogether – otherwise he’ll have to spin-off ABC and the stations/cable networks into a separate company and figuring out how to avoid hefty taxes on any kind of sale. 

We’ve seen these kind of threats of selling ABC before, but this time feels different as linear TV declines amid a writers’ and now actors’ strike. While Iger feels linear TV isn’t worth it anymore, this week all five Chicago local news stations provided timely and life-saving information as severe weather and tornadoes tore through the area Wednesday night. Don’t tell this nonsense to anyone who had their homes damaged or to the McCook family who lost their motel in the storm, who was comforted by ABC 7 reporter and anchor Mark Rivera. Hard to imagine Iger conjuring up that same kind of compassion. 

Sadly, none of this matters to him  as the balance sheet is the only thing he cares about. The mere thought of selling these top-rated stations to a bunch of consolidators or some cost-cutting hedge fund vultures is very appalling and proves the public interest is no longer valuable to him.