With reports swirling that The Walt Disney Co. might consider selling its ABC stations and perhaps the network as well, analyst Marci Ryvicker of Wells Fargo put pencil to paper to figure out what those assets might be worth.
Her bottom line: possible sales proceeds in the range of $5 billion to $6 billion for the station group and $4 billion to $6 billion for the network, based on their recent operating performance and a seller’s multiple of 8 time to 11 time earnings.
But Ryvicker doubts that such a deal is likely in the near future. “According to our contacts, Disney’s ABC network would be at a disadvantage in terms of both advertising and reverse comp discussions should it remain a standalone asset,” she says in a Monday morning research note. Also the stations are in a position to generate $1.5 billion in retrans and reverse comp, making them hard to walk away from.
“Therefore, a sale of stations would likely be accompanied by a sale of the network - but here, we struggle with who would be the most likely buyer. Our sense is either private equity or a tech/internet company trying to gain entry into the TV ecosystem would be likely,” she says.
Pointing to a likely buyer of the TV stations alone turns up a different group of suspects. “In this case, the most likely scenario (in our view) would be a carve-out of the O&Os by some of the large market station groups,” Ryvicker says.
The stations that already have the largest number of ABC affiliate stations are Sinclair and Nexstar. In terms of ABC affiliates representing their greatest share of station revenue, the top groups are Scripps, Hearst and Cox.