Disney’s ABC Network
This month, The Walt Disney Company (DIS) showcased the ABC Network’s programming lineup at the advertising upfronts in New York. According to a Benzinga report from earlier this month, Disney’s ABC Network dismissed several television shows. The ABC Network axed six shows in total, including Agent Carter and The Muppets, which had low program ratings.
Disney’s ABC Network is a part of the company’s Media Networks business. Disney’s Media Networks business earns most of its revenues from affiliate fees and advertising. In fiscal 2Q16, affiliate fees comprised 54% of the Media Networks segment’s total revenues of $5.8 billion, while advertising comprised 34%. As the chart above indicates, Cable Networks comprised 68% of the company’s Media Networks revenues while Broadcasting made up the remaining 32%.
Importance of the ABC Network for Disney
At the MoffettNathanson Media & Communications Summit this month, Disney was asked about how the company viewed its ABC Network. While Disney acknowledged that ABC does bring in significant advertising revenue, the company does not view it as a business or a distribution network. Disney also mentioned that currently around 80% of ABC’s programming is owned by the network itself or is being produced by in-house production units.
Disney further stated that the network is in the business of creating valuable intellectual property, which has made it a strategic asset for the company. The ABC Network produces original programming for other platforms such as Netflix (NFLX) and sells the programming globally.