Needham urges Disney to shut down ABC, shift content to streaming amid Kimmel controversy

A Wall Street brokerage is urging Walt Disney to shut down the ABC network and relocate its programming to streaming platforms, arguing that such a move would lower regulatory risk and potentially lift the company's valuation. In a client note issued on Tuesday, Needham & Company recommended that Disney abandon ABC rather than pursue a sale, describing the solo broadcaster as a drag on risk and a drag on the stock's upside given ongoing regulatory uncertainties. The firm argued that transferring ABC’s content to Disney’s streaming services could simplify regulatory compliance and better align Disney’s asset mix with the increasingly digital media environment, where investor focus has shifted toward direct-to-consumer platforms.

Needham emphasized that the decision would be a strategic shift rather than a liquidation or divestiture, framing it as a way to unlock value by reducing exposure to broadcast licensing costs and volatility. The brokerage added that the regulatory backdrop surrounding broadcast licenses has become more costly and unpredictable for DIS shareholders, a factor it views as material to the stock’s fundamental outlook. "FCC intervention has made owning broadcasting licenses too expensive and too volatile for DIS shareholders, in our view," the note quoted firm analysts as saying.

Disney’s ABC has become a focal point in a broader debate over free speech and regulatory authority in the media industry, a debate intensified by the recent suspension of Jimmy Kimmel Live after comments about Charlie Kirk drew scrutiny from federal regulators. FCC Chair Brendan Carr publicly threatened to open an inquiry into Kimmel’s remarks, signaling a potentially heightened regulatory risk for broadcasters amid political commentary. Disney said Kimmel would return to late-night TV on Monday, a development that did little to quell investor concerns about the delicate balance between content, commentary, and regulatory oversight. The company has stressed that it values its late-night slate as part of its brand, while continuing to push growth through streaming and other digital initiatives.

The ABC network remains a strategic asset for Disney in terms of audience reach and sports rights negotiations, even as streaming gains momentum across the industry. Nielsen data cited in the Needham note show that ABC averaged about 2.4 million viewers in prime time across its broadcast and cable outlets during the summer of 2025, underscoring the network’s ongoing reach even as cord-cutting pressures persist. The figures illustrate the tension facing Disney: preserve the traditional broadcast footprint that supports sports and live events while expanding the streaming portfolio to capture younger, digitally oriented audiences.

In the broader media landscape, the late-night and streaming dialogue has intensified amid industry-wide shifts. In July, Paramount announced the cancellation of Stephen Colbert’s late-night program, a move Colbert described in media interviews shortly after as unrelated to legal matters. The controversy around Colbert’s remarks on Trump and the subsequent settlement in a separate defamation case have further complicated how networks approach political commentary and litigation risk. In a separate December matter, ABC paid $15 million to settle a defamation lawsuit brought by former President Trump over remarks on the E. Jean Carroll case, a settlement that highlighted the legal exposure that can accompany high-profile on-air statements.

Needham’s note reflects a distinct investor thesis: that regulatory risk associated with broadcast licenses and the evolving monetization path of streaming are pivotal factors shaping Disney’s near- and long-term value. The analysts contend that a strategic pivot away from a legacy broadcast network toward an expanded streaming platform could simplify risk, improve growth visibility, and better align Disney with the economics of modern entertainment. The brokerage did not respond to requests for comment on the note, and Disney spokespersons were not immediately available for comment.

As Disney weighs its options, observers note that ABC’s role in live sports rights and broad audience reach remains a meaningful asset in the company’s portfolio, even as streaming growth accelerates. The question for investors is whether a shift of this scale—shutting down a broadcast network and consolidating content on streaming—would unlock value quickly or whether it would require a more gradual, phased approach tied to subscriber growth and advertising dynamics across digital platforms. The evolving regulatory environment will likely remain a central variable in any such decision, given the high visibility of broadcast licenses and the political attention surrounding industry regulation.