Two analysts from Needham Securities think Disney should move all of its TV content onto the Disney Hulu and ABC apps and shut down its broadcast operations, citing increased pressure by the FCC; the kind of pressure that resulted in the suspension of the Jimmy Kimmel Show two weeks ago.
Needham Securities analysts Laura Martin and Dan Medina, in a note released last week recommended that Disney keep its broadcast licenses but shut down broadcast operations. Putting the licenses up for sale just puts Disney at risk of more FCC interference into its affairs, the analysts said in an article on Forbes.
“We calculate that shutting down (not selling) ABC would force (Disney) to write off about $1.7 (billion) to $2.7 (billion) of free spectrum value, plus about $1.4 (billion) of lost (free cash flow) per year, which is worth about $8.3 (billion) of value based on current TV trading comps,” Martin wrote.
The analysts think it would be worth more for ABC to stop broadcasting in order to avoid threats associated with the current political climate amidst a changing media environment spurred on by artificial intelligence.
"GenAI collapses time frames, thereby making the delays, distractions and headaches of regulation more expensive, so jettisoning regulatory risks is increasingly valuable,” they wrote.
Although it’s highly unlikely that Disney would follow their advice—particularly given its lucrative live sports contracts—the fact remains that revenues from local stations, an estimated $4 billion in revenues in 2024 continue to decline, Martin and Medina wrote.
