Iger says Disney TV assets could be sold

Disney CEO Bob Iger has opened the door to selling the company’s linear TV assets as the business struggles as the media industry shifts to streaming and digital offerings.

Iger appeared on CNBC Thursday, the morning after the company announced a two-year extension to his contract through 2026. He returned to the company’s leadership in November after Disney’s board ousted Bob Chapek with a two-year contract through 2024. find the next successor.

“When I came back, I realized the company had a lot of problems, some of which were self-inflicted,” Iger told David Faber at Allen & Co.’s annual conference in Sun Valley, Idaho, noting that he was busy. in seven months but there is more to do.

At the top of the list is the valuation of the traditional TV business, Iger said. Disney owns a portfolio of television networks, from broadcast station ABC to cable television channels such as ESPN.

Disney will be “broad” in its thinking about its traditional TV business, leaving the door open to a possible sale of networks. “They may not be core to Disney,” Iger said, adding that creativity from those networks is core to Disney.

On Thursday, ABC News president Kim Godwin told employees he supported extending Iger’s contract. Godwin encouraged ABC staff to focus on their work and their audiences, the person added.

An ABC News spokeswoman declined to comment.

Cable television channel ESPN, however, is in a different bucket. In that regard, Iger said Disney is open to finding a strategic partner, which could be in the form of a joint venture or divestment of ownership.

Iger said he predicted the future of traditional television and was “very pessimistic” when he left the company, and after returning he found he was right, saying it was worse than he expected.

Iger said when he last spoke with Faber in February, after the company announced a major restructuring, that he felt a “compulsion” to return to Disney and that his preference was to stay on his two-year contract.

“We did a lot very quickly, made significant cost reductions and achieved a significant restructuring of the company,” Iger said. “But tackling some of our biggest challenges.”

The appearance in February came shortly after Disney announced a sweeping restructuring that included thousands of layoffs and billions of dollars in cost cuts.

The reorganization ended a potential proxy fight with activist investor Nelson Peltz.

Disney was reorganized into three segments: Disney Entertainment, which includes most of its broadcasting and media operations; ESPN section; and the parks, experiences and product division.

These were the most significant moves Iger made in the months since his return. Disney announced that it will cut $3 billion in content and $5.5 billion in non-content spending, excluding sports. The company planned to lay off 7,000 workers.

In addition to searching for his next successor, Iger is tasked with bringing Disney’s streaming business back to profitability. Last year, media executives at all companies focused on how to make streaming profitable, especially after the behemoth. Netflix it lost subscribers early last year and has since been cracking down on ad-supported tiering and password sharing to boost revenue.

While the company posted profits in line with Wall Street estimates last quarter, flagship streamer Disney+ saw a loss of 4 million subscribers.

Those subscriber losses were offset by price increases, which Iger said was not to blame for the low numbers in May. Instead, he said, it shows room for further increases in streaming and pushes customers toward an ad-supported tier with the goal of reaching profitability.

The company announced last quarter that it would add Hulu content to Disney+ in an effort to increase Disney+’s reach and attract more subscribers to its cheaper, ad-supported tier it launched last year.

Disney has been mulling whether to buy all of Hulu since it owns 66% of Hulu Comcast owns the rest. Comcast is likely to sell its Hulu stake to Disney in early 2024, CNBC previously reported.

After returning to Disney on Thursday, Iger said the company had concluded it was “better off owning Hulu.”

He added that the combined Hulu and Disney+ offering will be available by the end of the calendar year and will not be hindered by upcoming negotiations with Comcast over valuation.

“The combination of these programs (streaming) is designed to clearly help businesses become profitable,” Iger said.

Disney plans to report third-quarter earnings after the market closes on Aug. 9.

Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.

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