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Media Companies Are Ready to Sell. Does Anyone Want to Buy?

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Larry said:
Disney has expected (or hoped) to take over Hulu for so long I’d think they already have a plan in place to finance the purchase and don’t need to make any asset sales to buy Hulu. That doesn’t mean they might not sell any assets down the line to pay off any debt they might incur in this purchase. But large corporations don’t usually announce acquisitions and have to sell off assets before the acquisition to enable the acquisition to happen.
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Which makes sense until you factor in that Iger has essentially put ABC into play with public comments about a sale. So, yeah, you could pay cash or incur debt that you've planned for---or you can leave that money in the bank and sell a declining asset that you're not that wild about anymore.

Pull quote from the article linked below:

"Citi analyst Jason Bazinet suggested in an Oct. 26 Disney report that the company’s various deals being considered by Iger could see possible asset sales — including its India business and linear TV assets — pay for the takeover of full control of Hulu....

In addition, the Citi expert estimated that Disney’s ABC network and TV stations, which Iger has said he could offload, could fetch a price tag of about $6.5 billion.

Concluded Bazinet: “Under most scenarios, the potential proceeds from a sale of the India assets and ABC are likely to offset the Hulu payment. "

www.hollywoodreporter.com

Disney and Comcast’s Hulu Staredown Nears End: Who Wins on the Price Tag?

Starting on Nov. 1, an option to begin the deal process for the 33 percent stake in the streaming platform — expected to be worth north of $9 billion — can be triggered.
www.hollywoodreporter.com www.hollywoodreporter.com
 
Larry said:
Disney has expected (or hoped) to take over Hulu for so long I’d think they already have a plan in place to finance the purchase and don’t need to make any asset sales to buy Hulu. That doesn’t mean they might not sell any assets down the line to pay off any debt they might incur in this purchase. But large corporations don’t usually announce acquisitions and have to sell off assets before the acquisition to enable the acquisition to happen.
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I agree that Disney has cash on hand anyway, but if Iger can offset even a portion of the Hulu transaction while getting rid of what amounts to white elephants, why not?
 
Kelly A said:
I agree that Disney has cash on hand anyway, but if Iger can offset even a portion of the Hulu transaction while getting rid of what amounts to white elephants, why not?
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I’m not sure ABC is as worthless as we think it is. Why would Disney waste time promoting and putting Monday Night Football for the network and O&O’s to make money only to sell it? Disney needs the O&Os
 
Loverofradio said:
I’m not sure ABC is as worthless as we think it is.
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This thread has had valuation estimates of ABC and its owned stations group of between $4 billion and $6 billion, so I'm not exactly sure where you're getting "as worthless as we think it is".

Loverofradio said:
Why would Disney waste time promoting and putting Monday Night Football for the network and O&O’s to make money only to sell it?
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That's like asking why you continue to put gas in your car if you're planning on trading it in within the next year.

You do what you need to do to maximize revenue and (hopefully) profit for as long as you own an asset.

Loverofradio said:
Disney needs the O&Os
Click to expand...

Not if they no longer own a network.
 
michael hagerty said:
This thread has had valuation estimates of ABC and its owned stations group of between $4 billion and $6 billion, so I'm not exactly sure where you're getting "as worthless as we think it is".
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I was going to say; since when did any of us claim ABC or the O&O group was worthless? Bob Iger just doesn't see any potential growth prospects for holding onto expensive TV and cable networks, let alone local stations that are facing increasing advertising headwinds and lack of revenue growth. For as much as it pains me to say it; I don't think Iger is wrong in his assessment.
 
Kelly A said:
I was going to say; since when did any of us claim ABC or the O&O group was worthless? Bob Iger just doesn't see any potential growth prospects for holding onto expensive TV and cable networks, let alone local stations that are facing increasing advertising headwinds and lack of revenue growth. For as much as it pains me to say it; I don't think Iger is wrong in his assessment.
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Exactly. The ABC network and its owned stations are a depreciating asset. Iger would be negligent if he rode them to the bottom.

For those who don't understand the shift that has happened here---I'll repeat: One-third of Hulu is worth just a shade under $9 billion. The ABC Television Network and its eight owned stations are worth, according to analysts, between $4 and $6 billion.
 
michael hagerty said:
Exactly. The ABC network and its owned stations are a depreciating asset. Iger would be negligent if he rode them to the bottom.
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Parts of it are, parts of it aren't. The ABC Network and stations also own property and copyrights. Those assets are valued differently from broadcasting. The ABC Network has diversified into the digital space, and in that way is growing. So it's complicated. Paramount has been selling a lot of the real estate connected to CBS. Disney, on the other hand, has been investing in ABC physical properties. When you look at ABC strictly as a broadcasting entity, it is depreciating. But in reality, it's more than that. That's why when I see values of $5 billion, my first question is what does that include?
 
TheBigA said:
Parts of it are, parts of it aren't. The ABC Network and stations also own property and copyrights. Those assets are valued differently from broadcasting. The ABC Network has diversified into the digital space, and in that way is growing. So it's complicated. Paramount has been selling a lot of the real estate connected to CBS. Disney, on the other hand, has been investing in ABC physical properties. When you look at ABC strictly as a broadcasting entity, it is depreciating. But in reality, it's more than that. That's why when I see values of $5 billion, my first question is what does that include?
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For the reasons you mentioned, that's why I believe Disney will sell ABC Network separately from the O&Os rather than try to force a package situation. The stations are fundamentally easier to sell off than trying to include all the IP and programming rights of the network.
 
Kelly A said:
For the reasons you mentioned, that's why I believe Disney will sell ABC Network separately from the O&Os rather than try to force a package situation. The stations are fundamentally easier to sell off than trying to include all the IP and programming rights of the network.
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The thing that complicates the station sale is capital gain. Like the radio stations, most of the television stations have been owned by ABC since their inception, so you have a lot of capital gain. So how do they sell the stations without all the tax? The track record on the reverse morris trust idea hasn't been good for stockholders. The problem Iger has is the declining stock price and stockholder hostility. They won't be any happier if he dumps a reverse morris trust on them.
 
michael hagerty said:
Nexstar has also expressed interest, but just in the ABC owned stations group. If Bloomberg and Wells are right about the valuation for the network and stations ($4-4.5B), that's not enough. The stations alone would be a fraction of that.

Byron paying $10B for ABC, owned stations, FX and NatGeo covers the Hulu tab.

www.thewrap.com

Nexstar Could Buy Disney's ABC Stations if Put Up For Sale, Senior Advisor Says

Nexstar senior advisor Tom Carter suggested that the company would be open to buying Disney's ABC TV stations if they were for sale.
www.thewrap.com www.thewrap.com
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The only problem for Nexstar’s bid, and it’s a big one, is pure math. Nexstar’s at the theoretical 39% ownership cap and at 68% overall reach.

h/t from @Sammi Brie for this chart and you can see why this is a problem:
1699052809705.png

I mean, Nexstar could be brazen enough to sell WABC to Mission Broadcasting as a shell duopoly with WPIX. Doesn’t mean it wouldn’t die on the vine like Apollo/Standard General’s failed purchase of Tegna or Mission’s aborted purchase of WADL (as Nexstar intended to fully operate that station).

Byron Allen’s bid, however, is a clean purchase, and is perfect goodwill PR for Disney and Bob Iger, selling the network and O&O chain to a successful Black entrepreneur in an industry that has never been encouraging or kind to them at all.
 
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