If Bob Iger’s tenure as the CEO of Disney between 2005-2020 was defined by one thing, it would be the deals.In 2006, he acquired a computer animation company founded by Steve Jobs called Pixar for $7.4 billion; in 2009 he acquired the down-on-its-luck comic book publisher Marvel for $4 billion; in 2012 he spearheaded the acquisition of George Lucas’ Lucasfilm for $4 billion; in 2017 he acquired a majority stake in BamTech for $1.6 billion, a streaming video provider that built the backbone of what became Disney+ and Hulu; and in 2019 he acquired the entertainment assets of Fox in a staggering $71 billion deal.Thanks to a blockbuster interview on Thursday, it seems clear that Iger’s second run as CEO will be defined by his dealmaking as well. This time, however, he’s mostly a seller, not a buyer.Speaking to CNBC’s David Faber on a makeshift TV set on the side of the road in Sun Valley, Idaho, Iger opined about Disney’s future in streaming, and what it means for many of its legacy businesses.In the case of ESPN, that likely means a “strategic partnership,” one that will help it make the jump to direct-to-consumer.In the case of its linear TV networks, well, Iger’s comment that “they may not be core to Disney” are the Sun Valley equivalent of a “for sale” sign.“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 Faber.The CNBC anchor then cited the ABC broadcast network and its local TV stations, as well as the FX cable channel, and asked Iger directly if they were for sale, and if they were not core to Disney, sparking Iger’s reply.“The distribution model, the business model that forms the underpinning of that business and that is delivered great profits over the years is definitely broken. And we have to call it like it is,” Iger added.Wells Fargo analyst Steven Cahall wrote Thursday that selling the linear assets would improve Disney’s CAGR (which looks at the growth rate of a company) to more than 20 percent. The ABC Network, its local stations, FX, Freeform and Disney’s 50 percent stake in A+E Networks are all seen by Cahall as up for grabs.“Divesting such assets would bring in cash and improve EPS growth,” Cahall wrote, adding that “the rationale would be getting rid of an asset that worries investors while stepping into a better growth, more streamlined DIS.”As for who would buy a declining asset like linear TV networks?“DirecTV was sold, and private equity is involved in linear TV broadcast,” Cahall wrote. In other words, the future of ABC or Freeform could be similar to that of newspapers, where private equity and hedge funds scoop up declining but cashflow-rich businesses, and figure out a way to maintain margins.In the case of ESPN, Iger was clear that Disney intends to remain an owner … but that a “strategic partner” that could bring something to the table would be welcome.“Whether it’s content value, whether it’s distribution value, whether it’s capital … if they come to the table with value that enables ESPN to make a transition to its direct-to-consumer offering, then we’re gonna be very open minded about that,” he said.In other words, he wants to find a company with deep pockets, an interest in becoming a major player in sports, and the ability to scale a premium service fast, and that is willing to share ownership of ESPN with Disney (and possibly Hearst, which still owns a minority stake in ESPN).Such a description immediately brings to mind the major tech giants Apple, Amazon and Google (via its YouTube video platform). They have more than enough cash to help finance ESPN, global reach, and a desire to build major streaming video businesses.They also have a strong interest in sports, with Amazon inking a multi-billion deal for NFL Thursday Night Football games, YouTube ponying up $2 billion per year for NFL Sunday Ticket rights, and Apple inking a 10-year $2.5 billion agreement with MLS.As it happens some of those potential partners are already in Sun Valley, presumably joining Iger for the annual barbecue dinner next to the Sun Valley duck pond. Among those spotted at the Idaho resort this week are YouTube CEO Neal Mohan, and Apple CEO Tim Cook. Iger, it should be noted, appeared at Apple’s last product event, where he touted the potential ESPN and other Disney properties on Apple’s Vision Pro headset.A possible dark horse would be Netflix, which has longed been intrigued by sports, but has balked at the cost. While Netflix is more of a direct competitor to Disney than Apple or Amazon or YouTube, the combination of the two companies could be what it takes to drive ESPN to a successful post-linear world.And then there’s Disney’s Star India business. The company is exploring its strategic options, either an outright sale or a new joint venture, looking to unwind one of the critical international pieces of the 21st Century Fox acquisition.ABC and Disney’s linear cable channels, ESPN, Star India: They may not be intellectual property, but they are historic media brands. And now interested parties might be able to buy a piece of them, or buy them outright, as Iger refocuses ESPN on a profitable streaming future.That streaming future is the one piece of the puzzle where Iger still appears acquisitive. Comcast has an option to force Disney to buy out its remaining 25 percent stake early next year.“There’s a mechanism to ultimately determine its fair market value and we’ll go through the process with them,” Iger told Faber. “The goal is to do it as quickly as possible.”With Disney already committing to move Hulu content into Disney+ by the end of this year, the buyout of Comcast’s stake is all but certain.In his initial 15 year run as CEO, Iger spent some $90 billion on acquisitions, but also grew Disney’s market cap from $48 billion to $257 billion. But that growth coincided with the money-printing machine that is the pay-TV business.Iger’s vision for Disney this time around seems smaller and more targeted, a business that can leave the legacy of cable and satellite television behind it, and place it more squarely in competition (and possibly in partnership with) with streaming-only companies like Netflix, Apple, and YouTube.“Rome wasn’t built in a day and DIS’s problems won’t be solved in Iger’s first year,” Cahall wrote. “But today’s interview does suggest action is underway.”
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