Disney’s ABC Stations May Be Acquired By Nexstar With “Little Friction,” Firm Advisor Tom Carter Says – Deadline

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Tom Carter, a longtime former Nexstar exec who is now a senior advisor to the CEO and board of directors, says the company could acquire Disney’s local ABC TV stations with “little friction” if they become available.

Disney CEO Bob Iger spurred talk of a potential sale of the eight stations over the summer when he said some of the company’s linear TV holdings “may not be core” to the company in the future. Private equity firms are among the potential buyers putting out feelers, given their sizable investments in local TV in recent years. Nexstar is a quintessential byproduct of M&A, with Carter estimating the company pulled off about 40 acquisitions in his first 10 years at the company. Multi-billion-dollar deals for Media General and Tribune Media vaulted what had been a boutique Texas firm 20 years ago to the No. 1 spot among all U.S. station owners, and last fall it showed its appetite again by taking a majority stake in The CW.

“We think there could be some opportunities depending on how things fall out,” Carter said of the ABC situation at an investor conference hosted by BofA Securities. The former president and COO, who segued to his advisory role last month, appeared alongside Nexstar CFO Lee Ann Gliha.

“Disney had talked about it this way: ‘Let’s morph into a GrowthCo and a SustainableCo,’” Carter said of the media company’s strategic shift during Iger’s second stint as CEO. “The only issue is, the SustainCo is funding the GrowthCo, and if you sell one, you’ve lost access to that cash flow. Granted, you’re going to have proceeds, but is that really what you want to do?”

If the answer to that question ends up being “yes,” then Nexstar would be a strong candidate to take over the stations, Carter said. Given the “massive” cash flow benefits resulting from past deals, “I think you’ll see us take a look at it,” he said. One potential complication would be programming overlaps. “You’re seeing ESPN simulcast a large portion of their sports telecasts on ABC. If you were to buy the ABC complex, how would that work going forward? There are a lot of questions that need to be answered.”

Asked about the FCC’s 39% cap on station ownership by one company, Carter acknowledged that the company is already at that limit. “But that would not preclude us from buying stations,” he said. “ABC’s portfolio of stations is modest. It’s only eight, largely in the top 10 markets. We’re in eight of the top 10 markets already with a CW station. We could buy a second station in that market and not increase our household footprint. There may be a few stations that would require divestiture of either a Nexstar station or an ABC station, but we could onboard those with relatively little friction.”

After a moment or two passed and the conversation was about to move on, Carter added, “I don’t know if there’s a deal to be done there. I think they’ve got to be a bit clearer in their own thinking about how that goes. We can take direction but we’re not necessarily out there leaning into this stuff without a clear path.”

Carter also shared an update on a protracted carriage dispute with DirecTV that has seen Nexstar stations remain dark for about 10 million customers of the satellite TV operator. The impasse began in July, and over the first month, “there wasn’t a lot of movement going on,” Carter said. In recent weeks, however, “we’ve been in pretty constant contact” with DirecTV, he said, without going into specifics. “Progress has been made. We’re not going to do a bad deal. But our expectation is that we’re going to reach an agreement at some point, hopefully sooner rather than later, because everyone agrees that it’s not in anyone’s best interest to alienate the consumer.”

On the carriage front, Carter and Gliha were asked for their takeaways from Charter’s closely watched renewal with Disney. “The outcome is good for us,” Gliha said, given that it preserves foundational elements of the pay-TV bundle. Carter agreed, saying of fellow stakeholders in pay-TV, “We’re putting the band back together.” By integrating streaming services with other channel offerings, as is called for in the Spectrum-Disney deal, “We’re recreating the bundle by bringing Disney+ back into the pay-television ecosystem and not strictly as a DTC product. So, one of the potential benefits of the Charter-Disney deal is that it could potentially lessen subscriber attrition going forward, because there’s less reason for customers to leave the bundle.”

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