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<blockquote data-quote="SlugSlinger" data-source="post: 4076552" data-attributes="member: 7248"><p>Disney up for sale? Maybe this should go into the bud lite thread.</p><p></p><h3>The media giant's television arm is more important than Bob Iger's recent comments suggest.</h3><p><a href="https://www.fool.com/author/4549/" target="_blank">James Brumley</a></p><p>The <strong>Disney</strong> (<a href="https://www.okshooters.com/safari-reader%3A//www.fool.com/quote/nyse/dis/" target="_blank">DIS</a> 0.46%) that investors know and love today could look considerably different in the future. That's the hint CEO Bob Iger dropped on Thursday anyway, speaking to CNBC's David Faber at Allen & Co.'s annual media and technology investor conference. Specifically, the company may put some or all of its linear television networks like ABC, The Disney Channel, National Geographic, and FX, up for sale, with Iger suggesting "they may not be core to Disney." As for ESPN, the company's looking for a strategic partner.</p><p></p><p>Fair enough. No one knows the inner workings of a corporation quite as well as its chief executive. It's his call to make regarding what pieces of the company stay or go.</p><p></p><p>The prospect raises a key question though: Just how "non-core" is the television operation to Disney? Let's just say Iger might want to rethink the prospect of a sale, or at least clarify his comments.</p><p></p><h3>Breaking down Walt Disney's business</h3><p>First, take Iger's comments with a grain of salt. Sometimes, CEOs say things that only partially reflect an idea that's being half-entertained by their organization. They're not always referring to actual plans, and the ideas may never be put into action.</p><p></p><p>On the other hand, <a href="https://www.fool.com/investing/2023/07/13/5-reasons-disney-is-keeping-bob-iger-around-until/" target="_blank">Iger</a> talked extensively about his concern with Disney's television efforts, adding:</p><p></p><p></p><p>Those aren't the words of a man who hasn't given the matter much thought.</p><p></p><p>But linear television is actually tied for first place among Disney's businesses in terms of revenue generation, and is nearly its biggest in terms of operating income. Linear TV out-earns streaming, films, and branded products, and it can give the <a href="https://www.fool.com/investing/2023/07/12/disney-world-isnt-dying/" target="_blank">theme parks</a>unit the occasional run for its money on profitability. In fact, the company's domestic TV arm alone accounts for roughly a third of the company's usual operating income, led by ABC and ESPN.</p><p></p><p>The graphic below puts things in perspective, laying out each business's top and bottom lines through the first six months of fiscal 2023 (which has been a fairly typical year so far). </p><p></p><p><img src="https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F739868%2Fdis_rev_opinc_h1_2023.png&op=resize&w=700" alt="Chart comparing Disney's divisional revenue to its divisional operating profits. 's divisional revenue to its divisional operating profits. " class="fr-fic fr-dii fr-draggable " style="" /></p><p>Data source: Walt Disney Corporation's fiscal 2023 Q1 and Q2 earnings reports. Chart by author.</p><p></p><p>Linear TV (domestic and international channels) made up 43% of the company's operating income for the period, so if TV isn't core to the company, then what is?</p><p></p><h3>It's complicated</h3><p>It's not easy to say what's really going on in Iger's head, mostly because Disney as a company is more complicated than it seems to be on the surface.</p><p></p><p>Take Marvel as an example. The comic book brand's history is legendary, and Disney's 2009 acquisition of it was savvy in that it brought lots of highly marketable superheroes into the fold. This intellectual property hasn't always been used quite as wisely as it could have been, however.</p><p></p><p>As Iger pointed out in his interview with Faber, writing stories for these characters works well on the big screen, but things change when they're appearing in an episodic series created for Disney+ or for linear television. To this end, Disney's chief executive wants to dial back the company's total output of Marvel content, as well as its Star Wars content, which has faced similar dilutive challenges; some Marvel content also airs on cable.</p><p></p><p>And yet, Marvel and Star Wars are arguably the biggest draws to the company's still-unprofitable <a href="https://www.fool.com/investing/stock-market/market-sectors/communication/media-stocks/streaming-service-stocks/" target="_blank">streaming</a> platform. Reducing the volume of new content available could sap the appeal of its Disney+ streaming service in an environment where consumers are already overwhelmed with a surplus of choices and soaring costs.</p></blockquote><p></p>
[QUOTE="SlugSlinger, post: 4076552, member: 7248"] Disney up for sale? Maybe this should go into the bud lite thread. [HEADING=2]The media giant's television arm is more important than Bob Iger's recent comments suggest.[/HEADING] [URL='https://www.fool.com/author/4549/']James Brumley[/URL] The [B]Disney[/B] ([URL='https://www.okshooters.com/safari-reader%3A//www.fool.com/quote/nyse/dis/']DIS[/URL] 0.46%) that investors know and love today could look considerably different in the future. That's the hint CEO Bob Iger dropped on Thursday anyway, speaking to CNBC's David Faber at Allen & Co.'s annual media and technology investor conference. Specifically, the company may put some or all of its linear television networks like ABC, The Disney Channel, National Geographic, and FX, up for sale, with Iger suggesting "they may not be core to Disney." As for ESPN, the company's looking for a strategic partner. Fair enough. No one knows the inner workings of a corporation quite as well as its chief executive. It's his call to make regarding what pieces of the company stay or go. The prospect raises a key question though: Just how "non-core" is the television operation to Disney? Let's just say Iger might want to rethink the prospect of a sale, or at least clarify his comments. [HEADING=2]Breaking down Walt Disney's business[/HEADING] First, take Iger's comments with a grain of salt. Sometimes, CEOs say things that only partially reflect an idea that's being half-entertained by their organization. They're not always referring to actual plans, and the ideas may never be put into action. On the other hand, [URL='https://www.fool.com/investing/2023/07/13/5-reasons-disney-is-keeping-bob-iger-around-until/']Iger[/URL] talked extensively about his concern with Disney's television efforts, adding: Those aren't the words of a man who hasn't given the matter much thought. But linear television is actually tied for first place among Disney's businesses in terms of revenue generation, and is nearly its biggest in terms of operating income. Linear TV out-earns streaming, films, and branded products, and it can give the [URL='https://www.fool.com/investing/2023/07/12/disney-world-isnt-dying/']theme parks[/URL]unit the occasional run for its money on profitability. In fact, the company's domestic TV arm alone accounts for roughly a third of the company's usual operating income, led by ABC and ESPN. The graphic below puts things in perspective, laying out each business's top and bottom lines through the first six months of fiscal 2023 (which has been a fairly typical year so far). [IMG alt="Chart comparing Disney's divisional revenue to its divisional operating profits. 's divisional revenue to its divisional operating profits. "]https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F739868%2Fdis_rev_opinc_h1_2023.png&op=resize&w=700[/IMG] Data source: Walt Disney Corporation's fiscal 2023 Q1 and Q2 earnings reports. Chart by author. Linear TV (domestic and international channels) made up 43% of the company's operating income for the period, so if TV isn't core to the company, then what is? [HEADING=2]It's complicated[/HEADING] It's not easy to say what's really going on in Iger's head, mostly because Disney as a company is more complicated than it seems to be on the surface. Take Marvel as an example. The comic book brand's history is legendary, and Disney's 2009 acquisition of it was savvy in that it brought lots of highly marketable superheroes into the fold. This intellectual property hasn't always been used quite as wisely as it could have been, however. As Iger pointed out in his interview with Faber, writing stories for these characters works well on the big screen, but things change when they're appearing in an episodic series created for Disney+ or for linear television. To this end, Disney's chief executive wants to dial back the company's total output of Marvel content, as well as its Star Wars content, which has faced similar dilutive challenges; some Marvel content also airs on cable. And yet, Marvel and Star Wars are arguably the biggest draws to the company's still-unprofitable [URL='https://www.fool.com/investing/stock-market/market-sectors/communication/media-stocks/streaming-service-stocks/']streaming[/URL] platform. Reducing the volume of new content available could sap the appeal of its Disney+ streaming service in an environment where consumers are already overwhelmed with a surplus of choices and soaring costs. [/QUOTE]
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