Pressured by a declining subscriber base for its flagship sports channel, Liberty Media chairman John Malone speculated Thursday that The Walt Disney Co. could spin off ESPN, merging the rest of its operations with a deep pocketed suitor, perhaps Apple.
Disney has been under sharp criticism as its ESPN subscriber base has plunged in the past few years. In October, those losses mounted as Nielsen estimated monthly customer declines doubled to more than 600,000 subscribers.
Talking to CNBC anchor David Faber Thursday, Malone said that Disney could be ripe for the taking because it is one of the few remaining large content-owning distribution companies left and doesn’t have a dominant shareholder. Those were attributes that many analysts said attracted AT&T to Time Warner.
“If someone went after Disney, my guess is Apple would have to finally make a decision,” Malone said, adding that in that scenario Disney would spin off ESPN as a separate entity. “ESPN could be owned and protected by a distributor in the U.S. and Apple would be more interested and have a lot more in common in terms of international branding. Fundamentally [Apple CEO] Tim Cook is a global player and fundamentally ESPN is a domestic service.”
Malone claimed no inside knowledge of a potential deal, adding that “When these tectonic plates start moving, it’s just fun to speculate.” He also gave his opinion on what could be in store for Facebook and its founder and CEO Mark Zuckerberg.
“At what point is he [Zuckerberg] going to want to step into this video space in a meaningful way,” Malone told Faber. “The question is when his growth slows and he’s looking for his next thing, what’s his next thing? My guess is he starts looking at video more seriously.”
Malone added that wouldn’t mean that Facebook would have to start producing its own content, but that “it might make sense for him to own some.”
Malone commented on the pressure for Disney chairman and CEO Bob Iger to reverse recent subscriber trends.
“I think the equity market has got that bug in their head that this is a longer term problem that he [Iger] has, and that somehow or other there is going to be some solution,” Malone said. “Otherwise, Disney should be trading at a substantially higher multiple. …It’s a quality global brand. ESPN in order to solve the issue of having to pay more every time the contract went up, they went long. At the moment that looks adverse.”