Prediction: Disney to Sell ABC Television

The only nice thing about living through the ravages of radio consolidation is that you get a keen sense of when the next victim is going to be served up to investment banks.

And that’s what’s happening now – in my view – by Disney CEO Bob Iger, owner of ABC.

If you’re reading about ABC News President David Westin’s radical news division cutback – 300-400 people either by buyouts or firing – you’re only seeing the headlines.

Look deeper and evidence mounts that ABC has NBC Universal “envy” and hopes to find a sucker – I mean, a sugar daddy. Sorry, I should say a buyer who will overpay for yesterday’s technology. A buyer so stupid that they are going to let Disney gut operations before any money changes hands and purchase yesterday’s technology, declining audiences and revenues.

Not possible?

Comcast did it when it agreed to purchase NBC Universal.

That’s because the Roberts family long wanted to be a major player in the content business not just cables, wires and Internet broadband.

Screw the timing. They want what they lust after and they can afford it.

Now, the writing is on the wall for Disney.

ABC Television is in play.

As one former insider told me, “ABC's version is baloney” – the facts suggest Walt Disney Company may be positioning the sale of ABC Television to focus on comic books and theme parks. Clearly they have no interest in being in the news business. As the ABC alum said, “Who needs news when you can have super hero's?” (I’m talking about comic book hero's not Iger).

Here are more suspicious moves:
  • ABC lets Barbara Walters out of news. I know she is aging but that apparently doesn’t matter on The View, does it?
  • ABC is gutting the profitable news division and journalists can agree that these cuts will seriously affect the professionalism and quality of news programming on-the-air.
  • Iger wants more fees from cable and satellite companies for carrying the third ranked network's programming – all this as the recession and poor programming are adversely affecting revenues.
The latest “Honey I Shrunk the News Division” memo comes from News chief Westin. Here are the points as he described them in a memo to staffers (my comments follow):

The transformation will have six basic components:

1. In news gathering, we intend to dramatically expand our use of digital journalists. We have proven that this model works at various locations around the world. We believe we can take it much further.

Digital journalists are cheaper than traditional journalists. And in the future when television as we know it today no longer exists, it will be digital journalists who gather, edit, produce and air content. The problem is ABC is in the traditional news business. Their digital operation is basically collateral damage. When Westin says “we believe we can take it much further” that is code for “we believe we can get away with digital journalism on the traditional platform and save even more”.

2. In production, we will take the example set by Nightline of editorial staff who shoot and edit their own material and follow it throughout all of our programs, while recognizing that we will continue to rely upon our ENG crews and editors for most of our work.

See, I told you. One person doing the work of many people. And while it may work for online journalism, why would viewers turn to traditional ABC television news to get what they can get better from online journalists who actually know what they are doing because they are doing it for the Internet and mobile Internet?

3. In structure, we will combine our weekday and weekend operations for both Good Morning America and World News.

So far, it’s all about money – not making the news programming better.

4. In special events, we will rely upon our program staff through the day and night to cover unexpected events and marshal personnel from across the division to cover scheduled events.

This has to cause a warm spot in the heart of Darth Vader or as I call him Lowry Mays. Existing every day to do your jobs and then for special events – more existing every day to do your jobs plus special events. Ingenious. Greedy. Sounds like ABC is carving the turkey before the feast.

5. In newsmagazines and long-form programming, we will move to a more flexible blend of staff and freelancers so that we can respond to varying demand for hours through the year…

Ah ha! Freelancers. Just say that secret word and divide all the dollars in savings. If you haven’t noticed, radio is way ahead of television in the use of freelancers. No health care. No commitment. Plug them in. Move them around. Send them on their way.

6. Overall, we will eliminate redundancies wherever possible.

To me, Mr. Westin, that would be numbers 1-5 above – all ABC is doing is gutting the news division.

So there you have it – probably ahead of everyone else – because we radio and records people know a desperate, greedy media company when we see it.

Here’s what is really telling.

Michael Nathanson, an analyst for Sanford C. Bernstein & Company, happens to be a contemporary of ABC CEO Iger. In fact, they went to the same college – Ithaca – so when he speaks I’m thinking maybe he knows something.

Well, he spoke -- in a Bloomberg article – one of the few that didn’t miss the big story.

Nathanson said this about Disney’s future:

“ABC is a good question … I would ask the company if ABC fits in.”

ABC is the third-ranked broadcast network in Nielsen's.

The company and its O&Os are estimated to be worth $5.3 billion – and to put that in perspective that’s about 14% of ESPN’s value.

Yes, from one ravaged industry to another – one small step for ABC, one giant step for new media which is starting to kill traditional media and force their clueless caretakers to take their money off the table.

In every way and even when it comes to cutbacks and selloffs, television is once again radio with pictures.

For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.