Disney May Break Into Pieces

At least one expert believes the only way that Walt Disney Co. (NYSE: DIS), crippled by bad management decisions, will be worth more than it is today is to break it into pieces. The plan might not work. Disney’s individual operations, when totaled, may not be more valuable than the overall company’s.

The idea to break up Disney comes from Wells Fargo’s Steven Cahall. He must believe that current CEO Bob Iger did not do a good job when he built Disney by combining its TV, cable, theme park, streaming and movie operations. The movie brands include Marvel, Pixar, and Star Wars. The market seems to believe the strategy is wrong, as it has sold down Disney’s stock by almost 50% this year.

Cahall commented, according to CNN: “Spinning ESPN/ABC is the best path forward, and we see it as a reasonably probable late-’23 event.” He seems to think Iger will see this as the best path forward as he tries to undo the strategy that has made Disney such a mess.

Unfortunately, a TV network is not an attractive investment these days. ABC is part of the old media world. Its news operation is decades old and from an era when people watched TV before cable. Its value has been overwhelmed by newer cable networks, which included the badly damaged CNN, the highly successful Fox News, and two other old-world networks: CBS and NBC. ABC also has prime-time programs, midday soap operas and late-night talk shows. Each relies heavily on advertising in a world in which advertising revenue has moved largely to Google, Facebook and Amazon.

As for ESPN, its audience is shrinking, at least based on cable viewers. It remains to be seen how many people will pay for a subscription. It has 25 million paid subscribers, but it also has several worthy competitors.

Disney would not be the first company to argue that the sum of its parts is worth more than the whole. However, some of those parts are in trouble.

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