• by Wayne Friedman , Staff Writer, November 8, 2023

Stock market and other pressures on legacy TV-based network groups to sell long-time business is growing -- everything from TV stations to cable networks and other businesses.

Walt Disney has already been subject to a number of analysts pushing it to sell its high-profile sports TV business, ESPN. And then came Bob Iger, chief executive officer of Disney, mulling over the wide consideration of a possible sale of its linear TV networks.

Now, another analyst -- Jessica Reif Ehrlich of Bank of America -- has put a bit of a red flag of sorts on Paramount Global because the company turned down suitors for Showtime and BET, which would have put billions in cash back into the company. 

Her bottom line from an investor's point of view was: “Hard to buy if not for sale.” From that, she now lowers her price buying target for investors $9 from $32. 

In the near term, however, Paramount just reported way-over-projected revenues -- and perhaps more importantly, a narrowing of losses at its closely watched direct-to-consumer (D2C) streaming business. 

Ehrlich says however, that it is important to have perspective here. That $9 price represents “a modest premium to the current trading levels of both Warner Bros. Discovery and Fox [although] a discount to Disney.”

The bottom line is that changing marketplace dynamics will force major changes. Expect some major TV network companies to break ranks and jump into making seemingly earth-shattering decisions to jettison some long-term TV brands that consumers have been close to for years. 

One might sort of believe it is already starting that Comcast's NBCUniversal agreement to sell its non-controlling 30% stake in Hulu for at least $8.4 billion might be included in these potential industry-changing moves. In part, there is already history -- a legacy of sorts with Hulu, now having been around for nearly two decades (2007).

But that probably is not what investors are looking for. Wider-eyes would prevail if a major number of TV/cable networks, TV stations, or other mothership brands were to suddenly depart.

TV network-based legacy media companies may have a hard time in letting go the value of the close viewer engagement these long-term brands own. But steady declines in revenue and cash flow will win the day, especially for near-term Wall Street investors. 

And when they move to actual losses, any major billion-dollar-producing divestitures might be too late.