Disney Is in Talks to Leave Fusion Joint Venture
Walt Disney Co. and Univision are in talks for Disney to exit Fusion, their joint venture cable and digital news network aimed at millennials that has struggled to gain traction since it launched two years ago, according to people familiar with the matter.
Both sides are trying to find a way for Disney to exit by the end of the year, some of the people said. While Univision buying out Disney’s stake is one of the options being discussed, it isn’t the only one, according to some of the people. Fusion was launched in October 2013 as a partnership between Disney’s ABC News and Univision, the Spanish language broadcaster. It was originally conceived as a channel targeting English-speaking Hispanics.
The idea was to give ABC News more access to the rapidly growing Hispanic population in the U.S., while giving Univision—which has seen its audience age in recent years—entree to a younger demographic. Univision handled the content side of the channel while Disney was in charge of distribution and advertising sales. But Fusion’s programming strategy never fully jelled and the network ended up jettisoning the original concept in favor of a channel aimed at all millennials with a focus on pop culture and technology.
The venture, headed by Chief Executive Isaac Lee, who is also Univision’s chief news and digital officer, started out ambitiously. The company, based in Miami, hired a staff of 200 employees and a slate of well-known journalists to work both on camera and online. The strategy was to use the affiliate fees from the cable network to fund the growth of an online media network that could rival the likes of BuzzFeed and Vice to gain the attention of millennials.
However, that also proved to be a hard sell to consumers and pay-TV distributors.Fusion is available in 40 million homes and doesn’t subscribe to Nielsen for television ratings.Its online traffic is roughly 7 million unique visitors in November, more than twice what it had in March, according to comScore.
Fusion lost $35 million in 2014, according to a regulatory filing from Univision this year in preparation for its since-delayed initial public offering. Fusion’s assets were valued at $26.1 million.
For Disney, building Fusion has become less of a priority as of late, especially given the company’s recent investments totaling $400 million in Vice Media, which also targets millennials. In addition to those investments, Disney owns 50% of A&E Networks, which has teamed up with Vice to launch a cable network.
Disney is also concerned that growing distribution for the struggling Fusion network would be a challenge at a time when price-conscious consumers are cutting cut the cord to pay-TV or switching to small, cheaper packages of channels. Disney, which owns ESPN and Disney Channel, didn’t need to be spending its negotiating leverage on a little-watched cable channel, according to people familiar with the media giant’s thinking.
Univision is also eager to part ways with Disney and take control of Fusion, according to people familiar with the matter, as millennial-focused news is becoming increasingly important to Univision’s overall mission.