Monday, March 15, 2010

Will Disney Spin Off ABC?

In a very interesting turn of events, Disney is saying that they would consider spinning off their broadcast and affiliate networks from their cable properties. All this as Comcast is trying to merge a broadcast network NBC with it's cable properties. "Chief Executive Bob Iger said on Wednesday that the top U.S. media company was keeping its options open for dealing with TV network ABC and its struggling news division, including a spin-off." Certainly this was said in a shareholder meeting and may simply indicate that all options (even remote ones) are available, it may not mean that it is actively being considered. Still to talk spin off amidst a FCC review of a possible merger indicates two different management strategies.

The final decision will be a financial one. If broadcast can build a stronger revenue base, and retransmission fees from cable companies are one such option, the long term outlook for broadcast may be too promising to spin off today. Should regulation emerge to protect the consumer from dropped broadcast services, these new fees, if any, may not be enough for Disney to keep ABC. The results of the NBC-Comcast merger may provide some clue for a possible Disney-ABC spin off.