What Will Disney Do with ABC?

Kudos to the SEC for its latest criminal action against alleged insider trading. My sense is that Robert Khuzami and his team at enforcement will assumably have a far easier time proving their case against a secretary at Disney and her boyfriendthan they will the civil case filed against Goldman Sachs.


Strangely, the inclusion of an email in the criminal complaint about a possible sale of Disney’s ABC Network got The Walt Disney Company stock moving for a bit. Disney has denied that it had any conversations with private equity firms about a sale of ABC.

There has been little doubt in the market for some time that if Disney could find a buyer for ABC it would move to unload the network.

But that thinking would seem to be less true than it has been. As networks fight to get retransmission fees from the cable companies that carry their affiliate stations’ signals, the networks' own association with cable networks helps give them leverage.

When Disney negotiates with Comcast or Time Warner Cable or any other cable provider, it helps Disney’s position to have access to ESPN as a bargaining chip.

The point: ABC is more closely linked to Disney’s cable properties than it has been in the past and, as such, would be tough to separate from the whole; that, in turn, hurts the value proposition for any would be buyer of that network.

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Disclosure: Comcast has agreed to buy 51% of NBC Universal, which includes CNBC, from General Electric and is awaiting regulatory approval for the acquisition.

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