Comedian and media mogul Byron Allen has made a $10 billion offer for ABC and other linear networks owned by The Walt Disney Co., a spokesman for Allen and Allen Media Group confirmed.
TV station owner Nexstar Media Group, which bought The CW network, also has expressed interest in buying ABC and its stations from Disney.
Disney CEO Bob Iger at an investment conference in July said that the company’s linear networks, including ABC, may longer be “core” businesses for Disney, indicating a sale or a spinoff was being considered.
Disney has been at the center of the changes affecting the TV business. It jumped into streaming with Disney Plus, gaining millions of subscribers but losing billions along the way. It is also considering selling a stake in ESPN.
Disney’s networks were blacked out in a dispute with Charter Communications, which declared the cable bundle was broken and that it was content to proceed without ESPN and other Disney channels as long as their best content was going towards its streaming properties.
The dispute was resolved before the opening Monday Night Football game this week, with Disney letting Charter drop some Disney cable channels and resell Disney Plus and ESPN Plus.
The Allen bid, first reported by Bloomberg, is for the ABC Television Network and the eight ABC Owned Television Stations, plus cable networks including FX and National Geographic.
Allen, who has already acquired The Weather Channel and a group of TV stations, has said he’s prepared to spend as much as $10 billion to buy stations and other TV assets.
The bid is reportedly based on an 8 times multiple of estimated earnings before interest, taxes, depreciation and amortization (EBITDA) generated by the Disney TV businesses. The price could be adjusted based on the actual EBITDA figures.
Disney did not respond to requests for comment on the bid by Allen. Disney has said it is considering strategic alternatives for the TV business, but no decision about a sale has been made.
There was also a report that Disney has held talks with Nexstar about selling ABC and the stations.
Former Nexstar president Tom Carter, now an adviser to Nexstar chairman and CEO Perry Sook, told an investment conference earlier this week that there would be “little friction” if Nexstar tried to buy the ABC stations. “We think there could be some opportunities depending on how things fall out.”
Wells Fargo analyst Steven Cahall estimates the ABC network and its owned-and-operated stations generate about $2.2 billion in retransmission-consent fees from distributors and programming fees from affiliates, plus $2.7 billion in advertising revenue, for a total of about $5 billion.
Cahall estimates that the network breaks even in terms of EBITDA and the stations generate about $565 million in EBITDA.
“Any buyer of ABC would require long-term programming agreement for current shows from Disney’s studios and ESPN sports currently on ABC,“ Cahall said. “We think this would all justify an EV/EBITDA multiple closer to 8 times.”
Cahall said he thought investors would be in favor of Disney shedding its lower-growth linear TV assets.
