Disney Considering “Variety of Strategic Options” for Linear TV Networks

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The idea of Disney spinning off its linear TV networks gained momentum in the company’s quarterly earnings call.

While Disney’s broadcast and cable outlets — ABC, Disney Channel (and its offshoots), Freeform, FX and Nat Geo — remain profitable, CEO Bob Iger said on Wednesday’s earnings call that the company is looking into “a variety of strategic options” for those networks. ESPN is also part of the linear portfolio, but Iger stressed that while Disney is also exploring options regarding its TV sports business, the company wants to retain control of ESPN even if it brings on other partners.

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“While [linear TV] remains highly profitable, the trends fueled by cord-cutting are unmistakable,” Iger said. Thus, he said, Disney will take a look at its options. Linear networks generated $6.69 billion in revenue and $1.89 billion in profits for the quarter, down 7 percent and 23 percent from the same period a year ago.

Iger’s comments Wednesday follow on a July 13 CNBC interview in which he said the linear networks “may not be core to Disney” as the company continues to steer its business into streaming.

The CEO did note, however, that spinning off its traditional TV outlets would also impact its streaming business, as ABC, FX and Freeform shows all have next-day streaming on Hulu. FX also produces a number of series exclusively for Hulu.

“Clearly, if we are to do anything significant in terms of strategic direction for our linear networks, we have to keep in mind [the flow of] content for our direct to consumer business, notably Hulu,” Iger said. “Anything that’s to be done would be with an eye toward our growth business, which is streaming.”

Selling the linear networks would likely also create some logistical issues, but “nothing we couldn’t deal with,” Iger said.

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