Media Giants Weigh Costs of Separating TV Networks Business
The media industry is grappling with the future of traditional TV networks, and Disney has just done the math on separating its own TV networks business. According to Hugh Johnston, Disney’s chief financial officer, the operational complexity makes the cost outweigh the benefits – at least for now.
The State of Traditional TV
The cable news bundle, despite still generating significant revenue, is losing customers rapidly. In the first six months of the year, the industry lost 4 million traditional pay TV subscribers, according to MoffettNathanson estimates. Disney’s recent quarterly report reflects this trend, with revenue from its traditional TV networks down 6% to $2.46 billion and profit sinking 38% to $498 million.
Disney’s Apparent Commitment to TV Networks
This seems to be a reversal from last summer, when CEO Bob Iger opened the door to selling Disney’s TV assets. Iger had recently returned as CEO, implemented a major company restructuring, and was facing pressure from an activist investor. However, Johnston has evaluated divestitures and found no clear path to value creation.
Industry Insights
Other media giants are also weighing the complexities of separating their TV networks. Fox Corp. CEO Lachlan Murdoch noted that breaking apart the business would be difficult from both a cost and revenue perspective. Warner Bros. Discovery CEO David Zaslav emphasized the importance of the bundle as a core part of their business, delivering storytelling to audiences.
Content Integration and Streaming
Iger highlighted the content generated by traditional TV businesses and its integration with streaming, which remains a top priority for Disney. The acquisition of Fox’s entertainment assets in 2019 has provided valuable content to propel the streaming business. Despite challenges, Iger believes the TV networks business is essential to Disney’s overall strategy.
Leave a Reply