What really happened inside Disney

I analyzed the media industry for 20 years. Like any large industry, it’s complicated.

Despite how it feels, media companies are not run on an emotional basis. Like any big business, they’re managed for profit.

How media executives think

What you will read below is based my experience meeting with senior executives at CBS, CNN, Cox, Clear Channel (now iHeartRadio), Comcast, Condé Nast, ABC, Disney, Sony, Fox, AT&T, Time Warner, Oxygen, Discovery, Lifetime, Hearst, The New York Times, The Boston Globe, Meta, Twitter, Tribune, and lots of others I can’t necessarily recall at the moment.

You may imagine that media executives sit in their positions of power and decide whether to be courageous or cowardly, liberal or conservative, bold or timid.

Of course they don’t. They may have gut feelings but they don’t make decisions based exclusively on their feelings. Not only that, they don’t make decisions quickly and impulsively. They’ve been through it before. They have lots of smart people analyzing contingencies, examining financial implications of potential scenarios, looking at upsides and downsides, examining potential long-term impact on their brands, gathering information from independent thinkers (that was my role), and making projections.

What this means for Disney’s decisions about Jimmy Kimmel

Let’s just take the decision that Disney and ABC made to suspend Jimmy Kimmel for a few days, and then to bring him back. If you’re a viewer of ABC, Disney+, Hulu, ESPN, and so on, it’s easy to imagine that Disney first chickened out in the face of pressure from Trump’s FCC and then relented as a result of lots of public activity boycotting Disney. Hurrah! You got Disney to change its mind! That must feel very satisfying.

But is that really what happened?

Remember, Disney is a public company and its executives are required to act in the best interests of shareholders. That means that in any decision, they need to weigh both the short- and long-term impact of potential choices on profit.

After the FCC chair’s original comments, this is what Disney likely considered (I have no inside information, but this seems probable).

• Examine what were likely previously conducted projections of the value of the show “Jimmy Kimmel Live!” to ABC and Disney, including trends in the value of advertising and viewership in both live and streamed formats.
• Legal opinions on the obligations of the network to Kimmel, the show’s producers, and unions, as well as legal obligations to local broadcast affiliates and advertisers.
• Opinions from top constitutional lawyers on the constitutionality of FCC action and the likely outcome of lawsuits and appeals if the FCC attempted to revoke broadcast licenses of ABC affiliates in this unprecedented way.
• Analysis of the impact of possible decisions to cancel Kimmel or to keep him on the air on ABC’s and Disney’s brands .
• Analysis of whether Kimmel’s on-air comments constituted libel or bias.
• Analysis of the makeup of Kimmel’s, ABC’s, and Disney’s broader viewership for both liberal and conservative political opinions, and likely backlash from either side based on negative comments from the president of Disney’s decisions.
• Analysis of the likely impact of potential decisions by Sinclair and Nexstar ABC affiliates, which cover 22% of the nation, to stop airing the Kimmel show.
• Review of Kimmel’s next planned monologue, which seemed likely to further inflame the controversy. (This is why the day after the Kimmel comments on Charlie Kirk and the FCC Chairman’s remarks, the Kimmel broadcast was cancelled.)

Based on these factors, Disney decided to temporarily suspend Kimmel’s show and examine possible alternatives.

A number of things then happened. Kimmel and ABC executives had discussions about potential boundaries and guidelines for Kimmel that would allow him to remain on the air without threatening ABC’s broadcast license. Nexstar and Sinclair made their intentions to stop broadcasting Kimmel known. The Disney boycott became more visible.

Based on all of these developments, it became clear that the cost of bringing Kimmel back was the loss of the broadcast on Nexstar and Sinclair affiliates and the anger of the Trump administration, but most likely not an actual loss of broadcast licenses. It also became clear that the cost of canceling Kimmel, including the cost of obligations to the producers and star, lost advertising, and lost subscribers due to the boycott was higher than the cost of keeping him.

Did the boycott turn the tide? I’m sure it feels good to think that. It certainly made a difference. But people who boycott companies often come back. Do you really think people would cancel a trip to Disney World, or decide not to watch the rest of the season of “Only Murders in the Building” on Hulu or the next Marvel movie or Star Wars series out of principle? Somebody at Disney has surely made a study of media boycotts and was sharing the results with Disney executives making this decision.

Publicly, of course, this is being held up as an example of cowardice, consumer power, and courage. That’s a heroic story worthy of Pixar.

But what happened here was almost certainly a careful examination of likely long-term profitability from potential choices.

That’s pretty boring. But it’s how leaders of media companies, and all publicly traded American companies, think.

They don’t care what you think of them. They only care what shareholders think of their stock. And after careful analysis within the boardrooms at Disney, that, in the end, is why Kimmel is back on the air.