The ABC-owned television stations are poised to go on the market. The New York Post reports that the company is making moves toward a possible sale of the eight owned-and-operated stations, which could be worth billions.
Corporate owner The Walt Disney Co. is looking to hire an investment bank to help with the possible sale, the report notes.
"Disney’s ABC-affiliated stations are in larger markets, including New York, Los Angeles and Chicago, and reach roughly 23% of U.S. TV households," the story reports, adding: "The is not the first time Disney has flirted with selling its broadcast group, and sources cautioned that the media giant is still mulling the idea and may decide against it."
The network itself, however, is not for sale, according to the report.
"Disney CEO Bob Iger is interested in what the broadcast business could fetch now that station valuations are much higher than when the company last explored a sale in 2010," the Post reports. "In July, Tribune paid $2.73 billion for 19 stations owned by Local TV, while Sinclair paid $985 million for seven Allbritton-owned stations. Earlier, Gannett bought Belo and its 20 stations for $1.5 billion."
The story points to a recent "wave of consolidation as companies buy up TV stations to reap the rising ‘retransmission’ fees cable companies and other distributors cough up for the right to carry broadcast signals."
Said David Bank, an analyst with RBC Capital: “The station business is better than it’s been in a decade. However, stations are probably the least synergistic business to the Disney brand within the platform.”
The piece notes that revenue for the ABC broadcast stations was $5.82 billion in 2012, about the same as the $5.84 billion they generated in 2011.
"Disney’s ABC stations are in the midst of retrans negotiations with satellite-TV operator Dish. Broadcast rival CBS and its stations recently won retrans rates from Time Warner Cable that approach $2 per subscriber a month," the report adds. "Broadcasters are estimated to reap $3 billion in retrans revenue this year, according to SNL Kagan."
A spokesperson for Disney was unavailable for comment, the report notes.
The ABC-owned stations include WABC-TV in New York, KABC-TV in Los Angeles, WLS-TV in Chicago and WPVI-TV in Philadelphia.
Why would a company get rid of a big part of their network’s business model? Is that not giving up a lot of control for short-term money? Or is the bubble on television station value about to burst? This notion seems very dangerous to the network television business model.
They just want to see how much Google and Facebook might offer.
ABC publicly talked about moving their broadcast NETWORK to cable/satellite only in response to Aero and other systems that get around the retransmission fee process. The Aero case is still working it’s way through the courts but the networks have generally lost so far. If they move away from broadcasting to strictly cable/satellite then their TV stations are worth a whole lot less money. Not just retrans fees, but even their basic advertising revenues will drop dramatically. Thus they would want to spin off their O&Os before they wreck those stations primary revenue streams!