Disney CEO Bob Iger on Thursday, July 13, hinted at the possibility of selling the company's linear TV assets, citing the challenges faced by the traditional media industry in the era of streaming and digital platforms. Iger's remarks come as Disney continues to grapple with the evolving landscape and seeks to adapt to changing consumer preferences.
The announcement made exclusively to CNBC has raised questions about the future of Disney-owned Star India (rebranded as Disney Star) and its impact on the Indian television landscape.
Disney Star is a prominent media conglomerate that operates more than 70 TV channels in eight languages, reaching the majority of cable and satellite TV households in India.
Previously, a Wall Street Journal report revealed that Disney is exploring strategic options for its India business, including a potential joint venture or sale. Now, with this latest development, uncertainties loom over the fate of Star India.
While talks are still in the early stages, the possibility of Disney offloading its TV assets in India could have a significant impact on the Indian TV industry. The move could reshape the competitive dynamics and open doors for new players to enter the market.
However, it remains unclear which options Disney might pursue and how that would affect the existing content offerings and distribution strategies.
During the interview, Iger emphasised the significant challenges faced by Disney upon his return to the company, noting that the disruption of linear businesses has been greater than anticipated. He highlighted the need to ensure that Disney's cost structure reflects the economic realities of the evolving media landscape.
"The challenges we faced were greater than I anticipated. We had to confront the disruption of our linear businesses, which was more severe than I was aware of. We had to ensure that our cost structure reflect the economic realities of our industry. The most transformative work we did was dealing with no-growth businesses, particularly linear businesses."
Moreover, Disney's assessment of its traditional TV business extends beyond India. The company owns a portfolio of TV networks, including ABC and ESPN, which have played a crucial role in Disney's success over the years. However, Iger admitted that the traditional TV landscape is facing disruption and may not be considered core to Disney's future endeavours. This leaves the possibility of a potential sale of these networks on the table.
While the fate of Disney's TV assets hangs in the balance, Iger expressed a commitment to maintaining a presence in the sports business. ESPN, one of the most prominent cable TV channels under Disney, holds a unique position in the sports industry.
Iger mentioned that Disney is open to exploring strategic partnerships for ESPN, such as joint ventures or selling ownership stakes, to ensure its continued success in the changing media landscape. He expressed openness to strategic partnerships that can support ESPN's direct-to-consumer endeavours.
"I don't know when, but it will happen: we will offer ESPN directly to consumers," he said.
Disney has undertaken significant actions since Iger's return, including a major restructuring effort that included cost reductions, layoffs, and realignments within the company. The goal is to bring Disney's streaming business, including Disney+, to profitability.
While the company's recent quarterly results were in line with expectations, it experienced a loss of four million Disney+ subscribers. Iger sees potential in further price increases and the ad-supported tier to drive profitability.
Looking ahead, Disney aims to attract more subscribers by integrating Hulu content into Disney+. The company has also been considering the acquisition of the remaining stake in Hulu, currently held by Comcast, which is expected to occur in early 2024.
Disney is scheduled to report its fiscal third quarter earnings on August 9, shedding further light on the company's financial performance and future strategies.
On Thursday, Walt Disney's board made the decision to extend the contract of Chief Executive Officer Robert Iger by two years. Iger is an experienced leader who returned from retirement in 2022.
The board, in a statement, expressed its intention to uphold "continuity of leadership" throughout the company's ongoing transformation.
(Edited by : Shoma Bhattacharjee)
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