Friday, October 18, 2013

ABC Networks' O&O For Sale?

According to reports, Disney/ABC may be considering a sales of its eight owned and operated affiliated broadcast networks.  Although denied by the network, the timing might be right to separate the distribution side of the business from the content side.  And there may be a significant ROI, too.  "Disney CEO Bob Iger is interested in what the broadcast business could fetch now that station valuations are much higher than when the company last explored a sale in 2010." 

Of course, it was CapCities, the owners of broadcast networks that originally bought ABC, the content side.  That was prior to Disney buying the merged company.  Now with talk of unlocking shareholder value by concentrating on one side or the other, ABC/Disney may prefer to work in the world of content over distribution. They certainly aren't the first to make such a move.  Time Warner made the same decision when it spun out the Time Warner Cable business.  

Such a sale would certainly free ABC/Disney to construct interesting distribution partnership deals without having its internal businesses in a perpetual state of conflict.  It would enable more freedom to push a TV Everywhere approach for both linear and on demand streaming of all of its shows.  Still it would be hard to part with all the dollars flowing into the company from rising retransmission fees.  "RBC Capital analyst David Bank said rising retrans dollars are one reason Disney may be loath to part with the stations right now despite soaring valuations."  But if your strategists are telling you that the threat of companies like Aereo could disrupt the retrans model and future fees, it may be smart to gamble on other ventures, take your profits and concentrate on content focused ventures that better support the goals of the Disney/ABC brands. 

Certainly the rumors of a possible sale are flowing.  They will never be confirmed until the deal is consummated. Still, the timing and the opportunity to focus on content never felt more right.  To me, such a sale makes sense. 

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