The recent news that Comcast was going to spin off the majority of their cable networks into a new company has many people focused on the future of the myriad of cable channels that were dominant just a few years ago. Naturally, I wondered what Disney was going to do with their own cable networks. So let’s take a minute to look at each of them and see how Disney may manage these declining assets.
First of all, Disney has a strategy for ESPN. The upcoming launch of “Flagship” hopes to bring the core product direct-to-consumer in addition to making it available through the traditional multi-channel ecosystem. Time will tell if this strategy will succeed. One major question is whether folks will pay for just some major sports while still having to find ways to get access to the rest. ESPN has half the NHL rights, a third of the NBA rights, one or two NFL games per week, and one MLB game per week. If you are fans of sports, you may find signing up for ESPN Flagship lacking. Because of this, you may end up sticking with either a traditional bundle or go with one of the newer options like YouTube TV or Hulu + Live TV. It will be interesting to see how this all plays out next fall.
The next networks are Disney Channel and Disney XD. Cord cutting has impacted kids networks such as Disney Channel and Nickelodeon more than other channels as younger viewers have grown up watching streaming on-demand programs. Because these channels have seen dramatic audience erosion, it is hard to imagine Disney getting much for them. Also, what is Disney Channel when separated from Disney?
What’s the solution? I don’t have a silver bullet, but we have seen that live content such as sports still does well in a linear environment. Perhaps Disney should have more live shows on Disney Channel. Transitioning from its youth focus, perhaps it should be the live home of D23 and park events such as the recent christening of the Disney Treasure. They could also broadcast alt casts of sports programming such as the Big City Greens Classic and Dunk the Halls. Perhaps they could even debut marquee streaming shows such as Skeleton Crew a few hours before it hits Disney+ in order to create a communal experience. Live parks shows that give updates on what is happening across the globe could be a fun low-cost content opportunity too.
Freeform, which targets an age group just slightly older than Disney Channel, is facing major headwinds. Charter has already dropped the channel while none of their programming outside of their holiday stunts such as 31 Nights of Halloween or 25 Days of Christmas has found much success. While not tied to a Disney franchise, it is hard to see what anyone would get by owning the former ABC Family. NBC has decidedly not spun off Bravo, as that brand is considered a critical content provider for Peacock. Perhaps Freeform could become the destination for reality content destined for Hulu. They could also have live talk programming that would support the various shows such as The Secret Lives of Mormon Wives.
Speaking of providing content to Hulu, FX has been critical in providing some of Hulu’s recent hits such as Shogun and The Bear. But why would anyone feel the need to watch any of these shows linearly? I can’t imagine that Disney would give up their critical darling, so I envision that FX and FXX networks will continue to wither away while it transitions to primarily a production brand that provides Hulu with marquee shows.
National Geographic and Nat Geo Wild are tough nuts to crack. Their content has become a staple of Disney+, but by its very nature is not live. Nat Geo has partnered with ABC News for some live events such as the solar eclipse, so perhaps there is an opportunity there. But once again, how does Disney spin-off the asset while still keeping the National Geographic brand in partnership with the National Geographic Society.
The big one is the ABC Network. Network television has not seen the quick decline of cable as their mixture of news and sports along with broadly appealing content has shown some resilience. Meanwhile, Disney has lowered the cost of programming since the strike by using the network to rerun streaming hits such as Only Murders in the Building, lower cost news shows, and classic Disney movies on The Wonderful World of Disney. ABC also provides shows to Hulu such as Grey’s Anatomy and 9-1-1.
Despite Bob Iger stating that “everything is on the table” a few years ago, it appears that Disney feels that it would be too difficult and expensive to unwind these channels from The Walt Disney Company. Disney’s new-ish CFO Hugh Johnston said that they do not have any plans to change their current strategy. I wouldn’t expect Disney to go the Comcast route anytime soon. It appears that Disney views these channels as content engines for their streaming business. The hope is that the pace of streaming will outpace the declines in linear. This isn’t really a new concept, but now that streaming is starting to make a profit, perhaps Disney has found a way to turn their dream into reality.