ABC on chopping block? Sign of the times
Commentary: Recession has Disney, others evaluating assetsThe end of "Lost" might signal more than just the waning of high concepts, high costs and high expectations for network dramas; it also might signal that the conglomerate behind it and other high-profile series is considering calling it a day and selling off the network.
Sell off a broadcast network? It wasn't so long ago that everyone and their brother was clamoring to own one. Indeed, Comcast ostensibly still is, though its NBC Universal buyout is thought to be more about reveling in the dual revenue streams of cable channels than in overhauling the faded Peacock.
Such are the rumors, though, as Disney contemplates what assets it should and shouldn't hold onto for the next decade.
Not that finding a buyer now for an old-media media property, network or studio is getting any easier. Just look at how long MGM and Miramax have languished on the block.
In any case, it's amazing how quickly folks become unsentimental when the money doesn't seem to add up, and this after more than 50 years of a privileged relationship between Disney and ABC involving the very beginnings of Disneyland during the early 1950s. Heck, it was ABC uber-owner Leonard Goldensen who put up a crucial tranche to get the Anaheim theme park built, and it was the Alphabet that for years aired "The Mickey Mouse Club" and other Disney skeins.
But being teary-eyed over such a relationship doesn't cut it anymore.
"There's nothing too sacred not to be considered for the chopping block if it makes things healthier financially," one pundit tells me. Another points out that Disney chieftain Bob Iger, himself from the ABC side of the company, is simply being "a smart portfolio manager" in reassessing his assets and making sure they're all performing. "If you are going to keep a loss leader, the accent better be on the leader part," the analyst explains.
The wearying recession also has reshaped the thinking at media companies, making everyone with decision-making roles more ruthless in, or resigned to, cutting loose whatever doesn't appear to be easily or consistently monetizable. Just look at what Disney recently mandated ABC News to do, slashing jobs and outsourcing a worrying array of journalistic competencies. (To be fair, it is news divisions that have been the most fiddled with since the mid-'80s, but that doesn't make the latest round of cuts any less depressing.)
The tone in any case sure is different from the triumphant noise General Electric made when it acquired NBC, or CapCities exuded when it snapped up ABC during about the same time in the mid-'80s; bidders clamored for Loews-owned CBS at the time, too, including personalities as varied as Ted Turner, Ivan Boesky and even Jesse Helms.
A decade later, there was more effusiveness when Disney closed the trap door on the Alphabet network and its stations, unveiling the deal during a sleepy midsummer day in 1996 and evoking comments like those in The Hollywood Reporter's account, in which Wall Streeters dubbed it "stunning" and "brilliant." The $19 billion deal also sparked the venerable Westinghouse to move quickly to sew up its own deal to acquire CBS from Loews' Larry Tisch.
Headlines in THR announced the latter combo the very next day, Aug. 2, quoting Westinghouse CEO Michael Jordan as saying, "I'm glad to see our own judgment vindicated in buying a network," referring to the deal that had just upstaged his own.
Just four years later, Sumner Redstone beat back other bidders to merge his Viacom with CBS, and for years his public pronouncements focused on the cleverness of rolling up so many seemingly complimentary, mutually reinforcing brands.
But "just" is not the operative word. The period of those deals is now light years in the past, as technological change, program tastes and viewing habits, shareholder demands, piracy and crumbling business models have proved.
During that time frame, synergy between content creation and distribution went from the buzz word of the day -- remember the breathlessness with which combining Time Warner and AOL was heralded? -- to becoming anathema among those who had been instructed to implement it.
Like all networks, ABC has gone through ups and downs through the decades and is now on something of a downward curve now that such hits as "Lost," "Desperate Housewives," "Ugly Betty," "Grey's Anatomy," etc., are either over or getting older.
Hot hands give way every few years to crummy cards; entertainment heads get lobbed off before something emerges from development (which those axed heads probably greenlighted), and suddenly an entire schedule sparks to life again.
One of the conundrums facing a sale would be what happens when a production studio no longer is linked with a sister network. Ever since fin-syn rules faded, the impetus at the Hollywood conglomerates has been to make shows for their sibling operations and to hold on to distribution rights. Thus, in the fall, the ABC primetime schedule, like those of its rivals, mostly is filled with shows produced by its sister studio, and those in turn are distributed in other ancillaries by the company's syndication arms.
The only exceptions to this are Warner Bros. and Sony, the former with only a 50% interest in the CW, the latter prohibited from owning a broadcast network because of foreign-ownership restrictions.
Despite its much-ballyhooed stance as the numero uno "indie" supplier and its seeming delight in playing the field and pitching to every network, I can't help but think the Time Warner brass will be among those who'd kick the tires of ABC. (For what it's worth, Redstone recently reiterated that he'll "never" part with CBS.)
In the end, Disney might not see much logic in selling anyway, as in, so what if ABC is old media: If it's raking in the dough, who cares? Right now, the Alphabet's 10-strong station group, which used to be a license to print money, is, like most all such groups, suffering from an advertising downturn; the group is valued at about $5 billion, down noticeably from what such properties were worth a decade ago.
But to what extent and how quickly the country's big ad spenders -- car dealerships, grocery stories and banks -- return to local spot, and how much buoyancy will come from it being an election year, will be key factors to watch. Plus, a couple of new hits on the network sked couldn't hurt, either.
Elizabeth Guider can be reached at elizabeth.guider@THR.com.