Sight from the FX series Shogun.
Source: Disney | FX
Disney has done the math on separating its TV networks business, and it appears too messy to be done — at scarcely for now.
The company’s chief financial officer, Hugh Johnston, said Thursday on CNBC’s “Squawk Box” that the “cost is quite more than the benefit” when it comes to separating its TV networks business, given the “operational complexity.”
The future of the well-known TV network business has been top of mind in the media industry. In late October, Comcast executives said they were enquire into a separation of the cable networks business. Executives said the process was in early stages and the outcome was unclear.
The cable gossip bundle, despite still being a cash cow for companies, is losing customers at a fast clip. The industry overall fallen 4 million traditional pay TV subscribers in the first six months of the year, according to estimates from analyst firm MoffettNathanson.
Disney sign in Thursday that revenue for its traditional TV networks was down 6% for its most recent quarter to $2.46 billion, while profit in the partition sank 38% to $498 million.
Its apparent commitment to the segment seems to be an about-face.
Last summer CEO Bob Iger explained the door to the sale of its TV assets. Iger had recently returned to his post as chief executive, instituted a vast restructuring of the associates and was facing down an activist investor.
Johnston said during Thursday’s earnings call that soon after he linked Disney a year ago he began evaluating divestitures. He noted that after “playing around with spreadsheets” there was no distinct path to value creation after divesting the networks or other businesses.
“I like the portfolio the way it is right now. I wouldn’t fluctuate anything,” Johnston said Thursday on CNBC.
Similarly, Fox Corp. CEO Lachlan Murdoch earlier this month popular the complexity of separating the company’s cable TV networks — albeit a much smaller group of networks than its peers.
“From my point of view, I don’t see how we could ever do that. I think breaking apart part of the business would be very difficult, from both a set someone back point of view and from a revenue and a promotional synergy point of view,” Murdoch said on Fox’s earnings call.
Warner Bros. Exploration CEO David Zaslav noted during that company’s earnings call last week that despite impugns of the bundle, it is “still an extraordinarily important part of our business.” He added it is “a core vehicle to deliver WBD storytelling.”
Iger, on Thursday, reflected those comments, touting the content that stems from the traditional TV business and its integration with streaming, which remnants front and center for Disney.
Iger particularly highlighted Disney’s acquisition of Fox’s entertainment assets in 2019 as providing the cheerful to help propel the streaming business. Activist investor Nelson Peltz slammed the deal last year, foretelling it contributed to eroding shareholder value.
“We specifically mentioned that we were doing so through the lens of streaming, we saw a humanity where streaming was going to proliferate and we knew we needed not only more content but more distribution,” Iger said Thursday.
He prominent the 60 Emmy Awards Disney received this year for content including FX’s TV series “Shōgun,” “The Tolerate” and “Fargo,” which also appear on Hulu.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC, and is a co-owner of Hulu.