In what appears to be a rare public display of corporate rivalry, Disney's CFO seemingly took a jab at Warner Bros. Discovery and Comcast for their current business practices. Though the business world is known to be a relentless, often cutthroat environment, when it comes to public relations, few are as good as putting up a friendly front than corporations. Regardless of the situation, one can always count on a business delivering an optimistic statement on whatever situation is occurring.
Surprisingly, as mentioned, that was not necessarily the case with a member of Disney's top brass. Warner Bros. Discovery is currently in the process of being sold. Mutliple companies are submitting their bids for the studio, including Netflix, Paramount and Comcast. The one major entertainment player who did not join the race is Disney. Given its size and the number of companies already under its control, a merger between it and WBD would have likely been flagged as a significant anti-trust concern.
Speaking with CNBC, (via Deadline) Disney CFO Hugh Johnston was asked about mergers and acquisitions in the industry, including WBD's ongoing sale. Johnston revealed that, as a result of its varied portfolio, Disney won't be taking part in the highly watched process, or any current mergers processes, for that matter: "What they're talking about doing, it's really what we did 10 years ago, whether it was the Fox deal or the Pixar deal or the Lucasfilm deal. Bringing more in house is something that we did a good long time ago. As a result of that, we don't really need to participate in these things."
Warner Bros. Discovery intends to split into two separate entities—Warner Bros. and Discovery Global, with the former encompassing the company's fillm television and streaming endeavors, and the latter carrying linear-TV network assets. Comcast is similarly spinning off its cable networks into a new entity named Versant, which will include CNBC, USA, and MSNBC.
Discussing Disney's fourth-quarter revenue coming in below expectations, which led to a dip in share value, the CFO stated he believed the company's stock price was "underpriced":
"I believe it's underpriced. I really do. I believe investors are gonna build conviction in it over time. And we actually see some investors doing that right now. But I think we need to continue to prove the case that, 'You now what? As we go through this transition, we are gonna emerge one of the winners.' In fact, we are already one of the winners."
Johnston was then asked if Disney's assets were additive, instead of a "drag." The CFO responded: "No, I actually think quite the opposite. I think that integrated echo system works really, really well." The Disney executive then seemed to take a jab at both WBD and Comcast, stating: "This whole idea of splitting up assets and all that, that's what you do when you don't have a great business."
When comparing Disney to Netflix, Johnston said: "Our strategy's different. We run broad in terms of DTC [Direct to Consumer]. We have news, we have sports, we have broadscale entertainment, kids' entertainment. Who knows? Ultimately, on the service, you may see gaming, and things like that, as well."
It's rare to get comments like this from company executives, particularly because it could hint at Warner Bros. being perceived to be in a weakened state among corporations.
Following the interview, during a conference call (via Deadline), the CFO reinforced the fact that Disney was not interested in participating in any ongoing merger or acquisition. Johnston explained this was because the company had a "great portfolio," which would allow Disney to simply observe the acquisition processes currently happening, instead of taking part in them:
"[Disney CEO Bob Iger] and the team really built the IP portfolio that we have over the last decade—whether it was the Fox acquisition or Lucas or Pixar—so we actually feel like we have a great portfolio and we don't need to do anything. From that perspective, we’ll let this play out. In terms of other competitors, we'll see how the various moves play out, but we like the hand we have now so I wouldn't expect us to participate in making any significant moves."