A scene from the FX series “Shogun”.
Source: Disney | FX
disney has made calculations about separating its television network business, but that seems too cumbersome to pull off, at least for now.
The company’s chief financial officer, Hugh Johnston, told CNBC’s “Squawk Box” Thursday that the “costs will likely outweigh the benefits” of separating the television network business, given the “complexity of operations.” said.
The future of the traditional television network business is a top priority in the media industry. In late October, comcast Executives said they are considering separating the cable network business. Executives said the process was in its early stages and the outcome was unclear.
Although cable news bundles remain a cash cow for companies, they are rapidly losing customers. The industry as a whole lost 4 million traditional pay-TV subscribers in the first half of this year, according to estimates from analyst firm MoffettNathanson.
Disney on Thursday reported that its traditional TV network revenue for the most recent quarter fell 6% to $2.46 billion, and the division’s profit fell 38% to $498 million.
The company’s apparent commitment to this segment appears to be changing direction.
Last summer, CEO Bob Iger opened the door to selling its television assets. Mr. Iger had recently returned to his post as chief executive officer, begun a major restructuring of the company and faced off against activist investors.
Johnston said during Thursday’s earnings call that he began considering a sale shortly after joining Disney a year ago. He noted that after “playing around with spreadsheets,” he didn’t see a clear path to value creation after selling the network and other businesses.
“I like the portfolio the way it is, and I don’t plan on changing anything,” Johnston told CNBC on Thursday.
Similarly, fox company CEO Lachlan Murdoch earlier this month pointed out the complexities of separating the company’s cable TV network – even though it is a much smaller network group than its peers.
“From my point of view, I don’t see how that can be done. I think it would be very difficult to separate parts of the business, both from a cost perspective and from a revenue and promotional synergy perspective. ” Murdoch said on a Fox earnings call.
warner bros discovery CEO David Zaslav said on the company’s earnings call last week that despite the bundle’s challenges, it “remains a very important part of our business.” He added that this is “a central vehicle for conveying WBD’s storytelling.”
Iger echoed those comments Thursday, highlighting the content that comes from integrating traditional TV with streaming, which remains central to Disney.
Iger specifically highlighted Disney’s acquisition of Fox’s entertainment assets in 2019 as providing content that will help drive its streaming business. Activist investor Nelson Peltz slammed the deal last year, saying it would destroy shareholder value.
“We specifically say we’re doing so through the lens of streaming,” Iger said Thursday. “We’re seeing a world where streaming is pervasive, and we’re realizing that we need not just more content, but more distribution. I recognized it,” he said.
He noted that Disney has won 60 Emmy Awards this year for content such as FX’s TV series “Shogun,” “The Bear” and “Fargo,” which are also available on Hulu.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC, and is a co-owner of Hulu.
