Disney Thinking ‘Expansively’ About its Linear Channels; Content to Fuel Streaming Growth Will Be Key
To divest, or not to divest. That is the question that Disney is currently facing with its linear TV channels, a collection that includes one of the major broadcast networks in ABC, as well as well-known cable channels like ABC, Freeform, FX, Disney Channel and others.
Listening to Disney CEO Bob Iger speak at the 2023 Allen & Company Sun Valley Conference in Sun Valley, Idaho this summer, it seems his position on traditional TV is quite clear. He called linear television a “no-growth” business, and said the entire model was “broken.” He doubled down on those comments during Disney’s conference call to discuss its quarterly earnings report this week, saying that while linear TV was still pulling in revenues for Disney, the time was approaching when it would have to reconsider its position on those channels.
“While linear remains highly profitable for Disney today, the trends being fueled by cord-cutting are unmistakable,” Iger said. “And as I’ve stated before, we are thinking expansively and considering a variety of strategic options.”
One of those options is to sell off its linear channels altogether, though Iger hinted that if such a possibility becomes reality it won’t be overnight. ABC, FX, and other linear channels are important content pipelines for Disney’s streamer Hulu, and that will need to be kept in mind while making decisions about the future of each entity. Nevertheless, the company’s clear goal for the future is to emphasize its streaming offerings.
“If we are to do anything significant in terms of, call it, strategic direction to the linear nets, we have to keep in mind the need for content to ultimately fuel our [streaming] businesses, notably Hulu,” the CEO told analysts. “So anything that is to be done would be done with an eye toward maintaining a rich flow of content to fuel our growth business, and that will be streaming.”
There’s one collection of linear channels that Disney wants to keep if at all possible, and that’s ESPN. The company is eyeing strategic partnerships to sell minority stakes in the worldwide leader in sports to tech companies and major sports leagues in preparation for launching a streaming version of the channels and has generated significant interest thus far.
Disney clearly thinks that its future in television is in streaming, and it looks as if the company is willing to divest itself of assets that it isn’t tied to long-term. But it won’t be precipitate in selling off its linear TV channels, especially as they still constitute important content pipelines for Hulu in particular.
Hulu
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