With potential buyers emerging for ABC, the next challenge for Bob Iger and his bankers will be deciding on a price, and determining who can pay it. Once upon a time, in 1995, Disney agreed to pay $19 billion for Cap Cities, the then parent company of ABC. What’s the network worth today? Good question. ABC and its other “linear networks” had operating income of around $8 billion in the last 12 months, according to Disney’s financial filings. But it’s unclear whether Iger wants to sell that whole division or just ABC alone—or if he really has a choice—and how much EBITDA is generated by each unit, including by ABC.
Media mogul Byron Allen reportedly has offered $10 billion for ABC and some local affiliates, plus the FX and National Geographic cable channels. Who knows, though, whether that’s an appropriate offer or not. I’d assume by now—since Iger told the world in July that he would sell ABC—that Disney and its bankers have cobbled together a book about whichever “linear networks” it wants to sell, and that NDAs have been signed, and the financial projections slapped together into the Excel spreadsheets. My partner Dylan Byers reports that Nexstar and other potential suitors, including strategic buyers and private equity firms—Apollo? KKR? Blackstone? etcetera—have called to express their interest, although the talks aren’t particularly far along. Allen’s initial reported offer, of $10 billion, sounds a little low, especially if EBITDA is around $8 billion and, say, heading to $6 billion, for example. Less than 2x EBITDA? In this economy? Things are probably bad, financially, at ABC, but not that bad. Sorry Byron but there’s no way Iger can sell ABC to you for that low a number, unless things are a lot worse than most people think they are.
I can almost see why Allen, who is 62, would want ABC, FX and NatGeo. The former comedian turned entrepreneur has assembled an impressive portfolio of assets in his Allen Media Group, including the Weather Channel, as well as roughly 30 owned or operated television stations in 20 small and medium sized markets reaching about 5 percent of the U.S. population. He also partnered with Sinclair Broadcasting, in 2019, to buy 21 regional sports networks for $10.6 billion. (These were the assets that Disney had to buy and then sell as part of the $71 billion 21st Century Fox deal.)
