Disney unwise to sell radio operations

Oct 21, 2002  •  Post A Comment

Regarding Diane Mermigas’ story “plans new TV model” (EM, Oct. 7), perhaps experts can explain a few things to me. Though a longtime broadcaster who works for ABC News-Network Radio, I’m just a lay person when it comes to Wall Street, the entity we all seem to be working for nowadays, not corporations, board members, shareholders or customers.
Why would Disney, champion of synergy (nearly invented by Walt’s merchandising of movie cartoon characters), sell its radio operations, which provide in-house access to about half the citizens (consumers?) of the United States and other millions worldwide? Why would it sell, for a one-time gain, what may be the most consistent revenue generators (nearly recession-proof) in the corporation, also possessing perhaps the highest profit margin?
How can analysts compare revenues of broadcast networks such as ABC with cable channels such as ESPN, which rerun programming many times, do not receive compensation as do independent broadcast affiliates, do not have the overhead of operations in each market they serve and also do not have the opportunities provided by local sales, news and promotional people to promote and advertise programs and services?
Why are revenues or losses at broadcast networks examined only one way? Why are they not considered in connection with owned-and-operated stations, which, while not receiving compensation, get the majority of their programming for free, for telecast in major markets, with slots for local sale? They also receive much support from network services for their news, sales and promotional operations.
The relationship between networks and their O&O’s is essential, with each giving and receiving costs and benefits that cannot be separated. Separating their financial records for the purpose of assessing value in the marketplace is inaccurate. Just as would be separating the support TV, radio, news, movies, publishing and other branches provide for each other.
How do managers of independently owned and affiliated stations feel about their network in effect competing against their local programming, or even their network’s programming, on cable and satellite systems, with programs that used to be exclusive to their stations? How do network managers feel about their programs, rerun on cable, competing with their first-run programs?
Nobody begrudges a company for trying to make the most money possible. The more revenue, the less headaches. But we’ve seen the mistake General Electric made in selling NBC Radio.
I’ve got nothing personally against Wall Street analysts. But we in the news media often get criticized, and if we want to be better, we must examine how we make judgments, consider our mistakes and try to examine other points of view. Much business writing about radio and TV leaves me feeling that not much is really, really understood about how the business really works … or of what reflects its entire value.
Thank you for your obviously thought-provoking article.
Chuck Sivertsen
free-lance anchor/reporter
ABC News Radio (ABC Radio Networks), New York