(Reuters) -Walt Disney should shut down the ABC network rather than sell it and transfer the channel's content to its streaming platforms to lower regulatory risks and unlock higher valuation, brokerage Needham wrote in a client note on Tuesday.
The recent "FCC intervention has made owning broadcasting licenses too expensive and too volatile for DIS shareholders, in our view," the brokerage said.
Disney's decision to take Kimmel's show off the air last week added fuel to the debate of free speech in
America amid conservative uproar around the late-night host's comments surrounding the assassination of right-wing activist Charlie Kirk.
The suspension came after Federal Communications Commission Chair Brendan Carr threatened to investigate Kimmel's commentary about Kirk, sparking questions around regulatory authority as federal law prohibits the FCC from revoking a broadcaster's license for negative coverage or other speech the government dislikes.
Disney on Monday announced the return of the comedian to late-night television.
The media firm did not immediately respond to a request for comment on the Needham note.
ABC is very important for Disney's audience reach and sports rights negotiations, even as streaming grows. However, the business has seen declining performance in recent years, mirroring industry-wide trends as audiences increasingly shift to streaming.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Anil D'Silva)
