Bob Iger Says Linear TV Business ‘May Not Be Core’ to Disney

The Disney CEO is seeking a strategic partner to help take ESPN fully direct to consumer and reiterated plans to buy out Comcast’s minority stake in Hulu

Cannes 2023 Dial of Destiny Bob Iger
Bob Iger at the 2023 Cannes Film Festival (Credit: Getty Images)

Since returning to the helm of Disney in November, Bob Iger has been taking a close look at the company’s businesses and assessing the value they provide to shareholders.

During an interview on CNBC’s Squawk Box on Thursday, Iger said the company would be “expansive” in its thinking around linear TV and that several strategic options were being explored. He noted that ABC, FX, National Geographic and Freeform “may not be core” to the company and suggested that he would be open to the possibility of a sale. However, his thoughts on ESPN were different.

“We’ve had a great business and we want to stay in that business. That said, we’re going to be open-minded there too, not necessarily about spinning ESPN off, but about looking for strategic partners that can either help us with distribution or content,” he explained. “But we want to stay in the sports business.”

He added that Disney has already had “some conversations” with potential strategic partners for ESPN, with possible options on the table including a joint venture or an ownership stake.

“If they come to the table with value that enables ESPN to make a transition to direct to consumer offering, then we’re going to be very open-minded about that,” he added.

While the company hasn’t given a timeline for taking ESPN fully direct-to-consumer, Iger said that the eventual move is an “inevitability.”

“We haven’t said when, but we do know that it will happen,” he explained. “I think I’m much more certain about when but not prepared to say when that is, I won’t say whether it’s sooner or not, but I’m enthusiastic about it. I think sports stands tall in a sea of tremendous choice and is in many respects an advertiser’s dream and a consumer’s dream. Sports is very, very attractive media and we have a unique position and we feel that we should stay in it.”

Iger also addressed the company’s 2019 put/call agreement for Comcast’s minority stake in Hulu. Earlier this year, he suggested that he would be open to a possible sale of Hulu, but later reversed course.

“Over time when I came back, I was open minded about Hulu because there is this agreement with Comcast that actually calls for a transaction, their stake to us, sometime in 2024, and I didn’t want that to be an automatic. I wanted to look at that objectively,” he explained. “I spent a lot of time looking at that as part of the future of our streaming business and ultimately concluded that we would be better off having Hulu than not having Hulu.” 

Under the agreement, Disney can buy out the stake as early as January 2024, and Comcast can require that Disney do so. Disney has guaranteed a minimum total equity value of $27.5 billion for Hulu, suggesting that Comcast’s share would be worth at least $9 billion. As of Oct. 1, 2022, Disney valued Comcast’s stake at $8.7 billion.

“There is a mechanism to ultimately determine its fair market value, and we’ll go through the process with it,” Iger added. “The goal is to do it as quickly as possible.”

The company plans to combine Disney+ and Hulu into one combined app offering by the end of the year.

“Comcast does not get in the way of us doing that and the combination of those apps is designed to obviously help the business become profitable. Hulu is a diversified business in terms of its content offering, it’s done extremely well on the advertising front, it will help in terms of viewer engagement and advertising, meaning… it’s the right thing for us to do as we prioritize turning that business, not just into a profitable business, but a growth business, which I’m confident we can do.”