Walt Disney Co. shares briefly fell on Wednesday but recovered after reports indicated the U.S. Federal Communications Commission (FCC) is preparing to take action against the company in two distinct investigations related to its ABC network operations.
According to the report, the FCC is expected to move as soon as next month to conclude that daytime program The View does not qualify as a "bona fide" news interview show. That determination could be reached ahead of the Labor Day holiday, the report said.
Separately, regulators are reportedly preparing to refer a probe of Disney's broadcast licenses to an agency hearing - a procedural step that advances the inquiry toward the possibility of license revocation. That pathway would represent an escalation in the regulatory scrutiny of the company's stewardship of local ABC stations.
The two inquiries target different legal questions. One review assesses whether the parent company of the ABC network is fit to retain ownership of local station licenses. The second focuses specifically on program classification for The View - whether it should be treated under rules that apply to entertainment programs rather than exemptions reserved for bona fide news interview programs.
FCC Chairman Brendan Carr has argued that The View functions as a partisan, entertainment-format program rather than as a legitimate news interview show. He contends that the hosts' conduct - including openly advocating for or criticizing particular candidates - means the program should not remain exempt from the federal equal-time provisions.
Federal law obliges television networks to make equal airtime available to opposing political candidates. Programs designated as "bona fide news interview" shows are carved out from that requirement. If the FCC removes The View's exempt status, ABC would be required to provide identical airtime to opposing political candidates under the statute.
Disney is expected to challenge any FCC actions arising from these investigations.
Summary
Regulators are reportedly preparing dual actions against Walt Disney tied to program classification for The View and a fitness review of ABC's local station licenses, prompting a short-lived market reaction before shares recovered.
Key points
- The FCC is reportedly set to rule that The View is not a bona fide news interview show, potentially as soon as next month.
- The agency is also advancing a probe into Disney's broadcast licenses to an agency hearing, a step toward possible license revocation.
- Potential impacts are concentrated in media and broadcasting sectors and may influence investor sentiment toward broadcast network owners.
Risks and uncertainties
- Regulatory risk - An adverse FCC determination on The View's status could trigger equal-time obligations for ABC, affecting programming obligations and scheduling in broadcast media.
- License risk - Advancement of a license fitness probe to an agency hearing raises the prospect, though not certainty, of license revocation or other sanctions for ABC's local stations.
- Market reaction - Continued regulatory developments could create volatility in shares of broadcast network owners and related media equities.