The Walt Disney Co. has been quietly restructuring under new Chief Executive Josh D’Amaro. One of its cable TV assets was the first to go.
The Burbank-based entertainment conglomerate inked a deal Aug. 4 to sell off its 50% stake in A+E Global Media to its venture partner The Hearst Corp. for $1.2 billion in cash.
Founded in 1984, the cable TV provider behind “The History Channel” has split its ownership evenly between the two companies for decades. Now, it will operate as a Hearst subsidiary when the deal closes in September, under the current President and Chairman Paul Buccieri.
The move came at a time when multiple entertainment and media giants have either divested their cable TV assets or are considering doing so. Comcast Corp. has spun off its linear cable brands into Versant Media Group, including CNBC, and Warner Bros. Discovery Inc. announced plans to do away with similar assets before Paramount Skydance Corp. promised to take everything off its hands.
The A+E sale, however, does not mean Disney is liquidating its other cable businesses. Disney Chief Financial Officer Hugh Johnston has characterized cable TV networks as “brands with studios,” pointing to “The Bear” and “Shogun” as examples of network products that Disney leverages across distribution platforms.
“Separating those monetization platforms into discrete businesses is highly complex, and in our view, unlikely to create incremental value for shareholders, especially given where linear networks are valued in today’s marketplace,” Johnston said during Disney’s second-quarter earnings call with analysts in May.
A diversified business
With a push towards higher intellectual property utilization and technology, Disney is holding on to almost all its business segments beyond TV networks. Its linear revenues are declining, said Johnston in the earnings call, but Disney Entertainment has been growing all the same. The networks like ABC are seen as “strategically connected” to the sports business such as ESPN,
he said.
With a new multiyear collaboration to stream Formula E races on Disney+ and ESPN+, Disney is dealing with the instability of the film industry with a rounded approach and expanded offerings across different departments.
“The nature of the film industry is such that it is more of a portfolio game,” Johnston said during the third-quarter earnings call on Aug. 5. “The good news for us is our diversified business helps us basically cover the volatility that comes out of the film business.”
