Walt Disney's ABC Just Canceled the Highest-Rated Show On TV

It's not often you see a national TV network cutting ties to the biggest show on the broadcast schedule. But that's what Walt Disney's (NYSE: DIS) ABC just did, pulling the plug on ratings monster Roseanne as the show's eponymous star posted racist tweets that didn't mix with Disney's family-friendly company culture.

As a Disney shareholder, I have to applaud this gutsy decision. Here's why.

Long story short

After an 18-year hiatus, Roseanne Barr relaunched her sitcom earlier this spring. The show premiered to a massive audience of 18.4 million viewers and continued to lead Nielsen's broadcast ratings week after week. It's the stuff of a network director's wildest dreams as Roseanne's powerful eyeball magnet surely would draw in more advertising dollars for the next season.

The new Roseanne was always an odd duck at ABC because it wasn't shy about advocating a conservative point of view that included in-show support of President Donald Trump's agenda. ABC is not known as a conservative media outlet by any means, and Disney itself often leans left. CEO Bob Iger is drumming up funds to support Democratic senators facing difficult mid-term elections this fall, for example.

Roseanne got the thumbs-up at ABC anyhow, but its run came to an end today.

Monday afternoon, Roseanne Barr tweeted a response to a political discussion where she made a racially charged statement about President Obama advisor Valerie Jarrett. The tweet immediately faced heavy criticism.

Tuesday morning, Barr tweeted two apologies and said she's leaving Twitter. But the damage was already done. Four hours after the second apology, Bob Iger posted a tweet of his own:

And that was the end of Roseanne 's revival.

The business angle of Roseanne's scandal

The show had already caught management's attention for being too politically charged. Earlier this month, ABC Entertainment President Channing Dungey said that the second season of Roseanne would "focus not so much on politics as on family trials and tribulations."

The central star's off-screen antics turned that response up to 11. ABC and Disney didn't have any choice but to cancel the ratings monster before it could pay off in the form of increased ad sales.

ABC sure could use an advertising boost. Ad sales continued to fall in the recently reported second quarter, though last-minute ad sales in the so-called "scatter" market were surging 27% higher in the current quarter thanks to hits like Roseanne and the American Idol reboot.

Roseanne was just what the ad doctor ordered, but Disney still can't afford to be associated with racism. Apologies notwithstanding, there was no other way to read Roseanne's tweet, so out the door she goes. The broadcasting sub-section of Disney's media networks division accounts for roughly 13% of the company's total sales and 8% of its quarterly segment operating profits, which is a respectable slice but much smaller than the cable TV business, parks and resorts, or studio entertainment segments. The need to protect ABC's ad sales can't outweigh Disney's family-friendly overall appeal, which could undermine the performance and financial health of absolutely everything the company does.

So I don't mind ABC giving Roseanne the boot today. It may look like a daring move on par with Disney's boldest but is actually the best and only choice for both ethical and financial reasons.

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Anders Bylund owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.