Disney Plans to Stick With its Linear TV Channels, Operating Them as ‘Brands With Studios’

Comcast sold off its linear cable channels. Warner Bros. Discovery was about to do the same with its cable TV portfolio until David Ellison came into the picture. But Disney has so far bucked the trend of divesting the legacy assets that have become a burden to most media giants in the eyes of Wall Street analysts.

On Wednesday, during Disney’s quarterly earnings call, the new regime led by CEO Josh D’Amaro laid out the vision for operating ABC, FX, Disney Channel, Freeform and the handful of other domestic channels still in the Magic Kingdom. Hugh Johnston, Disney’s chief financial officer, pointed to FX and its success in 2024 with the global hit “Shogun.”

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“These networks are better thought of as brands with studios that produce content like ‘The Bear’ or ‘Shogun,’ and we monetize that content across multiple distribution platforms. Separating those monetization platforms into discrete businesses is highly complex, and in our view, unlikely to create incremental value for shareholders, especially given where linear networks are valued in today’s marketplace,” said Johnston, who is also senior executive VP.

Johnston emphasized that Disney sees its fortunes as being better off in the long run with its linear assets than by selling. The level of activity and revenue generated by streaming assets has started to far outpace the coin generated from linear ad sales, affiliate fees and licensing.

“We’re managing a monetization transition of these brands, and we are actually far down that migration path. We’re generating more revenue at Disney Entertainment in streaming than in linear, more than double if we look at it in this most recent quarter,” Johnston said. “So the linear earnings base is becoming smaller and smaller every quarter within our P&L. Yes, linear revenues are declining, but Disney entertainment as a segment is growing nicely.”

Johnston and D’Amaro also made strong statements of faith in ESPN as a cornerstone of Disney for years to come, amid perennial speculation that the Mouse House might sell all or part of the Worldwide leader. ESPN last year made the leap to offering a streaming-only option to consumers and also by having ESPN become part of the Disney+ constellation.

“Sports rights are expensive and can be diluted without scale, but we have scale in our most important market to us and the biggest sports media brand in the world in ESPN. We view sports as a key part of our programming strategy, and ESPN as an important contributor to our distribution portfolio,” Johnston said. “For sure, we have to continue to work through this economic transition for ESPN while also better leveraging it for our overall business.”

(Pictured: “Shogun”)