Shogun on FX
Source: Disney | FX
disney The math has been made on spinning off the TV network business, but it looks too confusing — at least for now.
The company’s chief financial officer, Hugh Johnston, told CNBC’s “Squawk Box” on Thursday that “the costs may outweigh the benefits” in spinning off the TV network business, given the “complexity of operations.”
The future of the traditional TV network business has always been a focus in the media industry. late October, Comcast Senior officials said they Explore the separation of cable TV network business. Executives say the process is in its early stages and the outcome is unclear.
Although the cable news package remains a cash cow for businesses, it is rapidly losing customers. The industry as a whole lost 4 million traditional pay-TV subscribers in the first six months of this year, according to estimates from analyst firm MoffettNathanson.
Disney reports Thursday Revenue from its traditional TV networks fell 6% to $2.46 billion in the most recent quarter, while profits from the division fell 38% to $498 million.
Its apparent commitment to this segment appears to have shifted.
Last summer CEO Bob Iger Doors open for sale of TV assets. Iger recently returned as CEO, undergoing a massive restructuring of the company and facing challenges from activist investors.
Johnston said on an earnings call Thursday that he began evaluating divestitures shortly after joining Disney a year ago. He pointed out that after “playing with spreadsheets,” there is no clear path to value creation after spinning off online or other businesses.
“I like the portfolio right now. I wouldn’t change anything,” Johnston said Thursday on CNBC.
Similarly, Fox Corporation Chief Executive Lachlan Murdoch pointed out earlier this month the complexity of spinning off the company’s cable network – even though it is much smaller than its peers.
“From my perspective, I don’t know how we do that. I think it’s going to be very difficult from a cost perspective and from a revenue and promotional synergy perspective to spin off parts of the business,” Murdoch said at Fox said on the earnings call.
Warner Bros. Discovery David Zaslav noted on the company’s earnings call last week that despite the challenges of bundling, it “remains an extremely important part of our business.” He added that it is “a core tool for delivering the WBD story.”
Iger echoed those comments on Thursday, touting content derived from the traditional TV business and its integration with streaming, which remains front and center for Disney.
Iger highlighted Disney’s get Fox’s entertainment assets in 2019 were primarily about providing content to help drive its streaming business. Activist investor Nelson Peltz slam The deal took place last year and it said it resulted in a loss of shareholder value.
“We specifically mentioned that we did this through a streaming lens, and we saw a world where streaming was going to proliferate and we knew we not only needed more content,” Iger said Thursday. More distribution is needed.
He pointed out 60 Emmy Awards Disney’s content acquisitions this year include FX’s “Shogun,” “Bear” and “Fargo,” which also appear on Hulu.
Revealed: Comcast owns NBCUniversal, the parent company of CNBC.
