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CEO Bob Iger says Disney is open to selling a portion of its equity in ESPN.
Iger, who recently signed an extension through 2026, says Disney would also consider selling or spinning off its linear television networks ABC, FX, National Geographic, and Freeform.
“Transformative work is dealing with businesses that are no growth businesses and what to do about them, and particularly the linear business, which we are expansive in our thinking about,” Iger told CNBC Thursday. “[Disney’s television properties] may not be core to the company.”
“And we’re going to look expansively about opportunities there because clearly, it’s a business that is going to continue to struggle.”
The belief around Wall Street is that Disney’s ownership of linear television networks hinders its market cap. Financial experts consider television properties dead weight, the explanation to why Netflix holds a larger cap than Disney despite the latter’s diverse business.
And networks like ABC, ESPN, and National Geographic are unlikely to rebound as households continue to cut the cord.
The value of said properties is not increasing.
“The challenges are greater than I had anticipated,” Iger explains. “The disruption of the traditional TV business is most notable. If anything, the disruption of that business has happened to a greater extent than even I was aware.”
Iger adds that Disney has conversations with potential partners that could improve ESPN’s streaming business.
ESPN is in the process of launching a direct-to-consumer product called “Flagship” that’d offer the linear ESPN channel as a standalone streaming service.
Flagship would differ from ESPN+, which offers separate content from the cable channel.
The idea is to offset lost cable subscribers by charging a subscriber a higher fee.
ESPN receives some $9.42 per month of the average cable TV bill, collecting fees from providers for each customer that has access to its network. Thereby Disney would likely charge more than double that for Flagship — selling the idea that if you only subscribe to cable for ESPN, $30 for Flagship is cheaper than a full cable package.
Disney currently owns 80% of ESPN, with Hearst Communications owning the other 20%.