In this article, Disney has evaluated the feasibility of separating its TV networks business and has determined that it is currently too complex to undertake. The company’s chief financial officer, Hugh Johnston, expressed on CNBC’s “Squawk Box” that the costs involved in separating the TV networks business outweigh the benefits due to the operational intricacies.
The media industry has been contemplating the future of traditional TV network businesses. Comcast executives recently mentioned their exploration of separating the cable networks business, although the process is in its early stages with an uncertain outcome. Despite being a lucrative source of revenue, the cable news bundle is experiencing a significant decline in subscribers, with the industry losing an estimated 4 million traditional pay TV subscribers in the first half of the year according to MoffettNathanson.
Disney reported a 6% decrease in revenue for its traditional TV networks in the most recent quarter, amounting to $2.46 billion, while profit in the division plummeted by 38% to $498 million. This stance marks a shift from last summer when CEO Bob Iger had hinted at the potential sale of TV assets.
Johnston, during the earnings call on Thursday, emphasized that after assessing divestitures for the past year, there was no clear path to creating value through the separation of networks or other businesses. Similarly, Fox Corp. CEO Lachlan Murdoch highlighted the challenges of separating the company’s cable TV networks due to cost implications and the impact on revenue and promotional synergy.
Warner Bros. Discovery CEO David Zaslav acknowledged the importance of the bundle despite its challenges, emphasizing its role in delivering storytelling. Iger echoed these sentiments, emphasizing the integration of traditional TV content with streaming, which remains a key focus for Disney. He highlighted the acquisition of Fox’s entertainment assets in 2019 as a strategic move to enhance the streaming business by providing valuable content.
Iger also mentioned the recognition Disney received at the Emmy Awards for content such as FX’s TV series “Shōgun,” “The Bear,” and “Fargo,” which are also available on Hulu. It is worth noting that Comcast owns NBCUniversal, the parent company of CNBC, and is a co-owner of Hulu.
