Cox’s 14 stations are up for sale and there are three strong ABC affiliates among them, in Atlanta, Charlotte and Orlando. They are a perfect fit for ABC if Disney really sees broadcasting in its future. The problem is, I’m not sure that it does.
We’re giving Disney one last chance to demonstrate that it has a long-term interest in the broadcasting business.
That chance is Cox Media’s TV group. The Cox family put its 14 stations in 10 markets on the block last July and is now actively shopping them to buyers or merger partners.
When it announced its intention, Cox indicated that it prefers the merge option. In that way, it can mitigate the taxes and keep an equity stake in broadcasting.
So, here’s the thing: Three of the Cox stations are strong ABC affiliates in the top 25 markets: WSB Atlanta, the flagship of the Cox group; WSOC Charlotte, N.C.; and WFTV Orlando, Fla. (The last two have duopolies.)
They are a perfect fit for ABC if Disney really sees broadcasting in its future. I’m not sure that it does.
I’ve heard valuations for the Cox stations of anywhere between $2.5 billion and $3 billion. and most of that derives from the three ABCs.
If Cox insists on a merger, Disney could absorb the whole group, hang on to the three and spin off the others, including eight other Big Four affiliates (four Fox, three CBS and one NBC) and an MNT duopoly.
There has been some ABC-Cox talk, but the consensus remains that Disney is unlikely to expand its station portfolio. Much of that is based on history. Since acquiring ABC in 1996, Disney has not acquired a single additional station, although it has sold two small-market ones (Flint, Mich., and Toledo, Ohio).
Most significantly, Disney in 2013 passed on buying Allbritton Communications, which owned WJLA Washington and a string of lesser ABC affiliates.
The ABC O&Os are generally seen as the finest collection of major market TV stations in the business, made so by 25 years of Oprah lead-ins and -outs and strong management by Walter Liss (retired) and Rebecca Campbell (promoted to better things in the Disney empire.)
The network, however, is another story. It is languishing right now in fourth place. Over the first six weeks of the season, its primetime in the 18-49 demo sank 12%.
The best you can say about the prospects for a primetime turnaround is that they are uncertain, mostly because there is a whole new regime of ex-Fox execs coming in to run Disney’s TV properties, which also includes studios and cable networks. The execs are refugees from Disney’s $71 billion purchase of 21st Century Fox’s production and international assets.
Peter Rice will be the top of the new TV hierarchy as chairman of Walt Disney Television and co-chair of Disney Media Networks. Reporting to him will be Dana Walden, whose purview will include ABC Entertainment, the unit responsible for ABC primetime.
Further obscuring the network’s future was the news last Friday that ABC Entertainment President Channing Dungey was stepping down after a two-and-a-half-year run. She’ll be remembered most for losing winning producer Shonda Rhimes to Netflix and canceling (not without good reason) her most successful show, Roseanne.
She is being replaced by Karey Burke, currently head of programing of the second-tier cable network Freeform, formerly ABC Family, formerly Fox Family, formerly the CBN Family Channel. ABC is a big step up for her.
Networks have always had their ups and downs, but Disney doesn’t seem to have any coherent strategy or vision for ABC other than to hope for some primetime hits.
The other networks, particularly Fox, are building around sports. Not so ABC. Long ago, it made the decision to concentrate most sports on ESPN where it could be better monetize the rights through the fees charged to cable and satellite operators.
The ESPN-first approach culminated in 2006 when Disney shifted Monday Night Football to the cable network. MNF had been a cornerstone of the ABC network for 36 years. Not incidentally, that move cut ABC out of the Super Bowl rotation.
There were several points at which ABC could have gotten back into the NFL business. NFL last year dangled out the rights to Thursday Night Football. ABC had no stomach for the numbers the NFL was tossing around, but Fox did, agreeing to pay $3 billion for this season and the four to follow. That’s on top of its regular Sunday package.
The latest evidence of Fox’s sports obsession is the extension of its deal with Major League Baseball until 2028. Its current eight-year deal had been set to expire in 2021.
The packages include the All-Star game, one league championship series, two division series and the World Series. According to Variety, Fox is paying as much as $5.1 billion for the additional seven years, or an average of $728 million per.
ABC has some major regular-season college football and the NBA finals, but that’s about it. On Disney’s fiscal fourth quarter call on Nov. 8, Disney CEO Bob Iger was asked about ABC and sports.
“Going forward, we haven’t made any decisions as to whether we would put more sports on to ABC or back on to ABC,” he said. “If the opportunities exist, we will consider it. But right now, ESPN and ESPN+ are the priorities.”
ESPN+ is Disney’s new $5-a-month sports streaming service. Judging from the Nov. 8 call, Disney’s two other direct-to-consumer plays, Hulu (it owns 60%) and Disney+, are also TV priorities, while ABC is clearly not.
Financially, ABC doesn’t mean all that much to Disney anymore.
Today, ABC — the network and the eight ABC O&Os — accounts for about 12% of Disney’s revenue and that percentage will shrink considerably after Disney closes next year on the 21st Century Fox buy.
So, we need a sign from Disney, reassurance that it is in broadcasting for the long haul and that it will continue to invest heavily in ABC, if not in sports then is some other fashion — like, say, a deal to buy three top 25 ABC affiliates.
Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here.