Disney Holds Initial Talks on Sale of ABC to Local Broadcaster Nexstar

Walt Disney Co. has held exploratory talks about selling its ABC network and TV stations to local broadcaster Nexstar Media Group Inc., according to people familiar with the discussions.

(Bloomberg) — Walt Disney Co. has held exploratory talks about selling its ABC network and TV stations to local broadcaster Nexstar Media Group Inc., according to people familiar with the discussions.

The talks are preliminary and haven’t involved a specific valuation, according to one of the people, who asked not to be identified because the discussions aren’t public. Nexstar would only be interested at the right price.

Media mogul Byron Allen, who owns a string of TV outlets, has also had discussions with Disney about an acquisition of the network and its stations, according to another person, who was familiar with his involvement.

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Shares of Nexstar rose 5.5% to $157.85 at the close in New York. Disney gained 1.2% to $84.48. 

Disney, in a statement, said that while it’s still considering a variety of strategic options for its traditional TV businesses, the company has made “no decision with respect to the divestiture of ABC or any other property.” Nexstar declined to comment.

Tom Carter, Nexstar’s former president and now an adviser to its CEO and board, told investors at a Bank of America Securities conference Wednesday that the company is interested in acquiring assets from legacy media owners like Disney that are looking to restructure. Nexstar could acquire the ABC outlets with possibly only a few divestitures to stay within limits on broadcast station ownership, he said.

The adviser added that there are some complications to a sale. ESPN, Disney’s sports network, shares many of its telecasts with ABC.

“If you were to buy the ABC complex, how would that work going forward?” he said. “There’s a lot of questions that need to be answered there.”

He also said Nexstar, the largest US owner of TV stations, needs more guidance from Disney on what it wants to do. 

“They’ve got to be a little bit clearer in their thinking,” Carter said. “We can take direction, but we’re not necessarily out there leaning  into any of this stuff without a clear path.”

Disney Chief Executive Officer Bob Iger said in July that he is considering divesting traditional TV networks like ABC. Broadcast and cable channels have been losing viewers to streaming services such as Disney+ and Hulu.

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Nexstar, based in Irving, Texas, has 200 owned or partner TV stations in 116 markets, including many affiliated with Fox, NBC and CBS. The owners of those networks could object to the company buying ABC and its stations. 

Federal regulators have been challenging mergers in general. Earlier this year, the would-be buyer of TV station-owner Tegna Inc. dropped its bid in face of delays by the Federal Communications Commission.

“As Nexstar is already the largest owner and operator of local broadcast stations, we do not see how it can lawfully purchase the full suite of ABC stations given they are already at the national ownership cap,” Rob Thun, content chief officer at satellite-TV provider DirecTV, said in an emailed statement.

The two companies are in a contract renewal fight that’s led to blackouts of Nexstar stations on DirecTV systems.

Nexstar recently acquired majority ownership of the CW network from Warner Bros. Discovery Inc. and Paramount Global last year. It also owns NewsNation, a cable news channel.

ABC and the company’s eight TV stations could bring in $4 billion, according to estimates from Bloomberg Intelligence. That’s about seven times its roughly $575 million in earnings before interest, taxes, depreciation and amortization, analyst Geetha Ranganathan said.

–With assistance from Scott Moritz.

(Updates with Disney statement in fifth paragraph.)

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