Disney May Move Some Linear Channels to A&E Networks; Channels That Supply Disney+, Hulu Content Most Likely to Survive

Disney’s evolution when it comes to its strategy surrounding its linear channels over the past year has been well-covered. Once the crown jewel of Disney’s entertainment segment, its TV networks are all losing viewers at an increasing rate, leading CEO Bob Iger to stunningly say over the summer that they might no longer be core parts of Disney's business.

• A new report from the Wall Street Journal indicates networks like History Channel and Lifetime could be folded into A&E Networks.
• A&E Networks is Disney’s joint venture with Hearst Television, so moving these channels would help Disney cut costs.
• Disney may attempt to cut costs and take whatever other measures are necessary to keep the channels that contribute to its streaming platforms Disney+ and Hulu in operation the longest.

What’s New With Disney’s TV Channels These Days?

It’s clear that Disney sees streaming as the future of home entertainment for the company. It’s taking all necessary steps to launch a streaming version of ESPN that won’t require a cable subscription, including courting partners that may purchase a minority stake in the network. It also has had conversations about selling ABC and some of its cable channels, though it appears that those talks are on hold for now.

A new report from the Wall Street Journal indicates that Disney may fold some of the channels it owns — such as History Channel and Lifetime — into the A&E Networks; a joint venture that it co-owns with Hearst Television. That would mean that Hearst would assume partial responsibility for the channels, including costs, which would help Disney move some of that financial burden off its balance sheet. From the sound of Iger’s comments on CNBC (as reported by WSJ) this week, Disney’s cost-cutting efforts along these lines may be enough to convince it to keep its linear channels for a bit longer.

“We have been considering various strategic options for each of our networks, not necessarily all together, but each of them,” Iger said. “You have to look at the business in terms of its strategic value to the company, too, not only its financial value.”

Which Channels Have the Best Chance of Surviving Disney’s Evolution?

For all of the talk of a sale of ABC, it’s one of the channels that has the best chance of sticking around at Disney for the long term. For one thing, ABC’s sports rights are deeply enmeshed with ESPN’s, so if the company wants to create a streaming version of the latter channel, it will need that web of broadcasting rights intact. ABC also sends next-day streams of its content to Hulu, which makes it valuable to the company as it continues to increasingly emphasize streaming.

It would also be very difficult to find a partner that has enough money to buy ABC, while also satisfying regulators that the acquisition would not cause any monopoly concerns. A company like Paramount Global or Comcast would be taken out of the running immediately for ABC, as both of those companies already own broadcast networks of their own in CBS and NBC, respectively.

FX is another one of Disney’s linear channels that contributes a huge amount of programming to Hulu. Shows like “The Bear,” “Justified: City Primeval,” “It's Always Sunny in Philadelphia” and “What We Do in the Shadows” are a critical part of the Hulu lineup, and the FX brand is highly associated with this type of content and with Hulu in general.

Finally, Disney Channel and its decades of family-friendly content are significantly important parts of the Disney+ catalog, to say nothing of the brand that the channel has spent decades building. All of these channels may become nothing more than tiles on their respective streaming services one day, but they’re likely to stick around as part of the larger Disney apparatus the longest, as they’re major content contributors to its streaming services.

For some of Disney’s more tertiary channels, however, all options are on the table. The company could well make a move in the coming months, such as folding networks like History Channel and Lifetime into its A&E Networks joint venture with Hearst.