Reuters says cable sports channel ESPN is worth $24 billion. Suppose Walt Disney Co. (NYSE: DIS) sells a third to raise money and create a strategic partnership. It might get $8 billion. Disney is about to buy out Hulu joint owner Comcast for $8.6 billion, which values the streaming service at $28 billion. The transactions are part of a restructuring that will not save Disney from deeper problems.
Who Wants ESPN?
Reuters sees Disney selling a part of ESPN to Apple or Verizon. Apple already has a streaming service. However, it is based on entertainment. ESPN could supplement that. But Apple likes things it can control. A minority stake will not do that. Verizon and Apple must deal with the fact that ESPN is a damaged asset, although it is still highly profitable. Cable systems that used to prize it as a channel have prized it less recently. That triggers a decline in profits. (These are the most famous TV personalities in America.)
What About Hulu?
Buying Hulu is an odd decision. Disney is already in trouble with Disney+, its primary streaming service. Current CEO Bob Iger started it in November 2019, when he held the chief executive job for the first time. Iger priced the service below almost all its competitors. That caused it to lose billions of dollars as its subscriber base rocketed to 160 million. Iger has raised prices for the service, which may prompt millions of people to cancel. Disney also has to contend with the challenge to Hulu and Disney+ from Amazon and Netflix, which are older and well-established.
Out of Options?
In his hand of cards, Iger still has his theme parks, which are a cash machine. However, he also has floundering legacy media, which includes ABC. (Customers are abandoning these brands.)
Wall Street’s vote on Iger is that he has done his job poorly and continues to. The stock trades at the bottom of its 52-week range, even though raider Nelson Peltz wants a board seat to “improve value.” Iger thinks he can do that on his own. He cannot. Iger cannot save Disney.
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