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Disney Withdraws from Fusion Partnership With Univision

Photo by Quick PS on Unsplash

The entire C-Suite at Disney must have recently read Eric Ries’s “The Lean Startup” because Disney is certainly going lean and trimming the excess fat in the process.

Earlier this week news dropped that Disney was in the process of unloading its stake in Fusion, a joint-venture between Disney and Univision. In October 2013, the two media titans joined forces to create what was described as “ABC News’s answer to a 24-hour cable channel, while giving Univision access to the English-language market.” In other words Disney was looking to compete against the likes of CNN, MSNBC, and FOX News and Univision presumably wanted to appeal to wider audiences, i.e. non-Spanish speaking Latinxs.

After shifting away from its initial audience, young Latinxs, the new network tried to jump into the crowded multimedia space geared towards all millennials. The joint-venture proved to be a costly gamble. According to Gawker, Univision lost $35 million from its investment in Fusion. By December 2015, Disney was ready to abandon ship. The New York Times suggests that Disney distanced itself from Fusion following culture clashes related to controversial issues.

Regardless of the reasons behind Disney dissolving its relationship to Fusion, Disney had its own issues to work through. For instance, Disney suffered the crushing loss of 3M ESPN subscribers over the last year, Disney’s most lucrative business.

But we should look at Disney’s investment in Fusion through the lean startup ethos. Disney took the risk associated with any investment. Disney failed fast and often. Disney, worth $187 billion, could bite the loss and look at its time with Fusion as learning experience.

Fusion might not have yielded the returns Disney was hoping for, but Fusion’s pivot into the broader millennial audience might have provided useful insight that Disney needed to double down on their investment in that market. In November, Disney committed to a $200 million investment in Vice Media. By early December, Disney expanded its investment to $400M in exchange for 10 percent of Vice.

Launching Fusion was certainly an ambitious project but potentially a strong indicator about the impending death knell to cable networks in favor of digital-first media platforms.

Earlier this year Fusion launched to connect with a millennial audiences. But by launching, Fusion was directly competing against Vice, Buzzfeed, and Vox for millennial audiences without differentiating it from the three leading players in that space.

Clearly the digital frontier is disrupting the entire media industry. But with the changes happening, it’s becoming increasingly more difficult for new ventures to enter the space without a strong selling point on what differentiates it from competitors especially without funding. The current leaders for millennial content have access to massive capital. Disney invested $400 million in Vice Media. In August, NBCUniversal invested $200 million each into Vox Media and Buzzfeed.

Perhaps if Fusion had launched its digital platform sooner, Disney might have remained committed to Fusion.

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