Disney’s future is a hot topic among Hollywood elite, as speculation mounts over the possible breakup of the media and entertainment giant. The company’s CEO, Bob Iger, who returned to the helm in November for a second stint, has hinted that some of Disney’s television businesses may not be core to its strategy, sparking interest from bankers, private equity players and potential partners.
Disney’s TV assets under scrutiny
Iger triggered the industry chatter in mid-July when he suggested during a CNBC interview that the company’s television businesses, including its stations and cable channels, “may not be core to Disney.” He said the company is evaluating its options and looking for ways to optimize its portfolio.
His remarks spurred a frenzy of activity among dealmakers, who began evaluating whether they should “make a move,” one banker, speaking on condition of anonymity, told Reuters. “He’s signaling to investors,” said the banker. “It starts people thinking.”
Iger fueled the conjecture last week during Disney’s third-quarter earnings call with investors, when he said the company is mulling strategic partnerships for its marquee sports brand, ESPN, and has received “notable interest,” though Disney planned to retain control. He also said the three businesses that will drive the greatest growth over the next five years are the company’s film studios, theme parks and streaming video.
Possible scenarios for Disney’s future
One top media executive envisioned Iger spinning off the ABC broadcast network, local TV stations and Disney’s cable networks such as Disney Channel or FX as a separate company, loading it with an appropriate level of debt. Another veteran media executive predicted Disney would spin off the television asset to its shareholders as a separate, publicly traded company by 2024, with private equity potentially playing a role.
A fourth media executive who has run traditional and digital media companies said Disney may need to attract outside investors in ESPN so that it can competitively bid for increasingly expensive sports media rights, such as for NBA games, which expire after the 2024-25 season. That would potentially free up cash for Disney to acquire NBCUniversal’s stake in Hulu, assuming full ownership of the streaming service next year. Under an agreement reached in 2019, NBCU parent Comcast can require Disney to buy the Hulu stake, or Disney can require NBCUniversal to sell it, as early as January 2024, at a market value of at least $5.8 billion.
Disney declined to comment on its future plans.
The ‘Full Bewkes’ strategy
The fourth executive, along with other senior media figures who spoke with Reuters, said Iger is likely crafting options, retaining ownership of ESPN, with the opportunity to shed it in the future to position Disney as a more attractive acquisition target. The executive likened the strategy to one executed by former Time Warner CEO Jeff Bewkes, who sold off parts of the media conglomerate’s business before selling its core film and television unit to AT&T in an $85.4 billion deal that closed in 2018.
Bewkes had previously spun off Time Warner Cable and AOL as separate companies, and sold off magazines such as Time and Fortune. He also invested heavily in HBO and Warner Bros., creating hits such as Game of Thrones and Wonder Woman. AT&T later renamed the acquired business WarnerMedia, which is now set to merge with Discovery in a $43 billion deal.
Disney could follow a similar path by focusing on its most valuable assets: its iconic brands such as Marvel, Star Wars and Pixar; its global theme parks; and its streaming services such as Disney+, which has amassed more than 146 million subscribers worldwide. The company could also leverage its intellectual property across multiple platforms and markets, creating new revenue streams and fan engagement.
Disney’s future is a hot topic among Hollywood elite, who are watching closely how Iger will shape the company’s destiny in his final years as CEO. He is expected to step down at the end of 2026.
