• by Karlene Lukovitz  @KLmarketdaily, September 15, 2023

Media entrepreneur Byron Allen has made a $10-billion bid to acquire the ABC TV network, the FX and National Geographic channels and local TV stations from Walt Disney, a spokesperson for Allen confirmed. 

Allen’s Entertainment Studios owns 10 HD television networks, including The Weather Channel, Comedy.TV and several other verticals, and also produces and distributes shows, and sells advertising for 43 broadcast and cable TV programs. 

Allen’s bid for the Disney assets is reportedly based on an eight-times multiple of estimated earnings before interest, taxes, depreciation and amortization for the Disney linear businesses. 

Disney has also held exploratory discussions with regional TV power Nexstar Media Group, according to multiple reports. 

Nexstar has not commented on those reports. However, on Wednesday, during a Bank of America Securities conference, Tom Carter, a former Nexstar president who now advises its CEO and board, confirmed that Nexstar is interested in acquisitions, and mentioned Disney as a potential seller. But he added that Nexstar doesn’t know “what Disney wants to do.” 

Disney, which has reportedly also considered selling a stake in ESPN, did not comment on the reports about Allen or Nexstar specifically, stating instead that while it is “open to considering strategic options for its linear business,” it has not yet made a decision about selling any of those assets. 

Disney CEO Bob Iger raised the possibility of Disney selling off some networks in a CNBC interview in July. 

“There clearly is content that they create that is core to Disney, but the distribution model, the business model that forms the underpinning of that business — and that is delivering great profits over the years — is definitely broken, and we have to call it like it is,” he said.

“Given the low valuations attached to standalone linear networks, it isn’t clear that there is an accretive move to be made here,” senior research analyst and MoffettNathanson co-founder Michael Nathanson wrote in a note at the time. “Simply exiting bad businesses at any cost might be the price you pay to limit management and investor distractions in the long run.” 

The stock prices of Nexstar, Tegna and E.W. Scripps, which had all declined since Iger’s remarks, rose on Thursday after the reports of sale discussions. 

Disney acquired Capital Cities/ABC for $19 billion in 1995, when Michael Eisner was CEO. 

In addition to its national network, ABC has eight owned and operated regional TV stations and 240 affiliate stations. 

Nexstar owns 200 stations in 116 markets and the 24-hour cable news channel NewsNation, and would likely have to divest at least some properties in order to stay within federal TV ownership limits if it struck a deal to buy the Disney linear networks. Such a deal might also face opposition from Disney rivals that have affiliate station deals with Nexstar, including Comcast and Paramount.