The rumor of a possible acquisition appeared to start after former Nexstar Chief Operating Officer Tom Carter claimed at an investor conference this week that the Disney stations could be acquired by the broadcaster with “little friction” if they were offered up for sale.
Nexstar itself helped propel those rumors by linking to three stories on its website that originated from entertainment and media-focused publications The Wrap, Deadline and Next TV. And the report appeared to grow even longer legs after financial news outlet Bloomberg on Thursday reported that Disney and Nexstar had been holding backroom discussions over a potential sale of ABC and its eight owned-and-operated television stations.
By Thursday afternoon, Disney was working to shoot down those rumors as unsubstantiated, with a company spokesperson saying there was “no decision with respect to the divestiture of ABC or any other property.”
“Any report to that effect is unfounded,” the spokesperson said.
Carter’s comments and the various rumors that followed came several weeks after Disney CEO Bob Iger suggested the company was willing to part ways with some or all of its broadcast and cable channels, saying the linear networks “may not be core to Disney.”
“The creativity and content they create is core to Disney, but the distribution model, the business model that forms the underpinning of that business, and that has delivered great profits over the years, is definitely broken,” Iger told CNBC in July. ” And we have to call it like it is. That’s part of the transformative work that we’re doing.”
Disney owns the ABC television network and the Disney Channel cable network, as well as an 80 percent stake in sports multiplex network ESPN. It also owns FX, National Geographic Channel, Baby TV and Freeform, cable channels it acquired through two separate dealings with 21st Century Fox (now Fox Corporation).
When compared to its three broadcast network peers, Disney owns the smallest amount of local television stations, with just eight in its portfolio.
Nearly all of the TV stations were owned by Capital Cities Communications, which acquired the ABC network in the mid-1980s. “CapCities” was bought by Disney in 1996, bringing ABC broadcast stations in New York City, Los Angeles, Chicago, Philadelphia, San Francisco, Houston, Raleigh-Durham and Fresno into the same business as Disney’s theme parks and movie studios.
The “little friction” comment by Carter — who earlier this year announced he was entering a phase of “semi-retirement” from Nexstar while staying on at the company to serve as an advisor to its founder and CEO, Perry Sook — appears to be a nod to the six major market ABC-owned stations.
In all of those markets, Nexstar also owns at least one television station, which means acquiring six of the eight ABC-owned broadcast outlets would not put it over a federal regulation that restricts any one broadcaster from owning TV stations that cumulatively reach more than 39 percent of the American viewing audience.
Nexstar is the largest owner of local TV stations in the country, with more than 160 licensed broadcast outlets to its name. It gets around the federal ownership rule by operating television stations that are technically licensed to Mission Broadcasting and White Knight Broadcasting, two media companies that appear to exist solely for the purpose of benefiting Nexstar (the matter is part of an ongoing antitrust lawsuit filed by satellite broadcaster DirecTV earlier this year, which is still pending in federal court).
Based in the Dallas suburb of Irving, Nexstar has made swift acquisitions over the last few years as part of a robust growth strategy. In 2019, it stepped in to acquire the assets of Tribune Media after a deal by Sinclair Broadcast Group to acquire 40 Tribune TV stations fell through. Last year, Nexstar acquired a 75 percent in the CW Network, and the company is current in the process of bankrolling a deal that would see Mission Broadcasting buy a low-rated Detroit TV station for $75 million.