Disney’s CFO Shares Insight on Company’s Commitment to Traditional TV Amid Industry Changes
Disney’s Chief Financial Officer, Hugh Johnston, reaffirmed the company’s commitment to maintaining its linear TV operations during a recent earnings call with Wall Street analysts. Johnston stated that there are currently no plans to spin off or sell Disney’s linear television networks.
This declaration comes amid a leadership transition at Disney, highlighted by Josh D’Amaro’s ascension to CEO earlier this year. Former CEO Bob Iger had previously suggested that linear networks might not be core to Disney’s future strategy, though he later clarified that those remarks were more of a “test” for strategic thinking.
The conference call followed Disney’s favorable earnings report, which was boosted by significant growth in its streaming platforms, Disney+ and Hulu, contributing to strong performance in the company’s Entertainment division.
As competitors like Comcast and Warner Bros. Discovery take steps to purge their balance sheets of linear TV assets in response to industry-wide declines due to cord-cutting, Disney appears to be diverging from this trend. Stocks of companies reliant on linear television have struggled recently. For instance, A+E Global Media, a joint venture of Disney and Hearst, has engaged financial advisors to explore strategic options amid the industry’s downturn.
This year, Comcast spun off most of NBCUniversal’s cable networks into a separate entity, Versant. Meanwhile, Warner Bros. Discovery announced intentions to separate its linear business from its studios and streaming operations, although this plan has been complicated by a pending $110 billion acquisition offer from Paramount, which plans to continue operating linear networks despite facing challenges in that segment.
Johnston acknowledged the increasing focus on linear entertainment assets, including ESPN. He articulated that networks should be viewed as brands that produce content—evident in shows like The Bear and Shōgun—which is monetized through various distribution platforms. He emphasized that breaking apart these monetization strategies into separate entities would likely not generate additional shareholder value, particularly given current market valuations.
Johnston further elaborated on the transition within Disney’s brand monetization, indicating that revenue from Disney Entertainment and streaming now surpasses that of linear ventures, with more than double the revenue reported in the most recent quarter. He noted that while linear revenues are declining, the Disney Entertainment segment continues to experience substantial growth.
Separate from the broader discussion on linear TV, Johnston addressed the situation with ESPN, categorizing it as still evolving in terms of monetization since the launch of its new app. He acknowledged that while live sports rights are costly and potentially dilutive, Disney holds a competitive advantage with ESPN as a leading brand in the sports media landscape. Johnston reiterated that sports programming remains a vital aspect of Disney’s strategy.
While recognizing that ESPN’s economic transition is ongoing, Johnston expressed confidence in the company’s ability to leverage ESPN for its overall business growth.
