• by Wayne Friedman , September 15, 2023

On the heels of its Charter streaming/network carriage deal, Walt Disney is said to be in early talks about another ground-breaking agreement: Selling ABC TV network and TV stations to Nexstar Media Group, the largest U.S. TV station group, according to a report in Bloomberg.

Another Bloomberg story said Byron Allen, chairman/CEO of Allen Media Group, has made a $10 billion deal to buy ABC TV Network, ABC TV stations and other Disney cable TV networks -- FX and NatGeo.

Responding to a Television News Daily inquiry, a Disney representative said: 

“While we are open to considering a variety of strategic options for our linear businesses, at this time The Walt Disney Company has made no decision with respect to the divestiture of ABC or any other property and any report to that effect is unfounded.”

If the Nexstar-Disney deal were to occur, Brian Wieser, media analyst of Madison and Wall, said:

“ABC would add to [Nexstar’s] existing $2 billion-plus of annual ad revenue to become almost as big as Fox. In fact, as a seller of advertising it would become larger than Snap, placing Nexstar as the 12th largest seller of advertising globally, and probably a top 10 seller in the U.S.”

Steven Cahall, media analyst for Wells Fargo Securities, said:  “We think investors are in favor of Disney shedding these lower growth linear assets.” Cahall believes this could happen even though the sales of those businesses would be inked at lower than the current Disney enterprise value-to-cash flow sales multiple. 

Cahall went on to say: “The next question is if other networks will follow -- such as FX, Disney channels, Nat Geo, etc. -- [with Disney] keeping those content creation engines.”

This comes as legacy media companies are frantically working to boost growth and profitability of streaming services and perhaps jettison slower growing linear TV business, according to analysts.

In July Bob Iger, chief executive officer of Walt Disney, on CNBC said the company was mulling the idea of selling the company's linear TV networks.

At that time, he said: 

“There clearly is content that [those networks] create that is core to Disney, but the distribution model, the business model that forms the underpinning of that business — and that is delivering great profits over the years — is definitely broken, and we have to call it like it is.”

The recently agreed to Disney-Charter distribution deal is ground-breaking in its own regard, according to analysts, because it includes, for the first time, streaming app distribution, for Disney+ and ESPN+ , as part of traditional broadcast/cable TV network distribution deal-making.  

Streaming services and legacy TV networks can be now sold in one TV bundle to consumers.  

For many analysts this changes the original streaming business strategy model -- morphing a direct-to-consumer' model to now include traditional TV ‘middlemen’ distribution such as cable operators, satellite and telco pay TV providers.