by Ray Keating
News/Analysis
DisneyBizJournal.com
July 19, 2022
Depending on who one turns to for an assessment, Hulu is either a leader and an opportunity for Disney, or a potential financial burden.
Comcast still owns 33 percent of Hulu, with Disney controlling the rest, gaining Fox’s 33 percent Hulu stake in the 2019 acquisition of Fox. As it stands now, Comcast has a passive role in Hulu and has agreed to hold that position until 2024. After that, Comcast can force a buyout by Disney based on a total valuation of $27.5 billion – with Comcast then getting more than $9 billion from Disney – or Disney could choose to execute the buyout. That price tag, however, could go higher if an independent party determines that the fair market value is, in fact, higher. This is one of the big-dollar unknowns left behind by Bob Iger.
If you read a recent take at CNBC, Hulu is a problem child for Disney, not really fitting in and Disney not offering a clear vision for the service. Indeed, it was emphasized that perhaps Hulu could be sold to Comcast, as opposed to Disney completing its purchase of Hulu from Comcast. However, it’s hard to see how the possible challenges laid out for Hulu with Disney, if accurate, of course, wouldn’t turn out to be much the same for Comcast, which already has the Peacock streaming service.
Meanwhile, a recent Hollywood Reporter story offered the following: “At the very least, Disney will be forced to strike a deal with Comcast over the future of Hulu, with the cable giant able to force Disney to buy out its 33 percent stake in 2024 for market value. Given Chapek’s ambitions in streaming, an early buyout could give Disney more optionality in its plans.” An early buyout? Wow. That’s quite a different take.
And then there’s a Wall Street Journal article published on July 18 that, based on an analysis done by Antenna, reported Hulu subscriptions growing faster than Disney+ subs. It was noted: “New subscriptions to Hulu have outpaced those of Disney’s flagship streaming platform, Disney+, in 18 of the past 24 months, and total new subscriptions to Hulu have exceeded those to Disney+ in each of the last six quarters…”
Indeed, it also was noted in the CNBC story: “Hulu has doubled its total subscribers since 2018. The streaming service continues to churn out critically acclaimed series, including ‘Pen15,’ ‘Dopesick’ and ‘The Dropout.’”
According to the reporting, Disney basically confirmed the data presented in the Journal analysis. So, the assertions that Disney might sell Hulu to Comcast appear pretty absurd.
Analysts do seem to be unified in looking for greater convergence between Disney+ and Hulu. Maybe, and it’s unclear as to what that would mean exactly. That question also goes to how distinct Chapek views the Disney brand. He has indicated a willingness to be more expansive, beyond the strictest family-friendly-fare criteria. Yet, there remains plenty of material that is hard to imagine fitting on Disney+, and those also are opportunity-rich areas, which further strengthens Hulu as part of the Disney portfolio.
Looking ahead for the near term at least, it’s hard to deny that the Disney bundle – Disney+, ESPN+ and Hulu at one price – will help the company gain or keep subscribers across all three streaming services in a tougher economy.
Is Hulu a problem child or a valuable asset that’s aiding Disney’s streaming dreams? I strongly lean toward the latter, but the company would benefit from more explicitly showing where it plans to take Hulu, and how it fits in with or alongside Disney+.
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Ray Keating is the editor, publisher and economist for DisneyBizJournal.com; and author of the Pastor Stephen Grant thrillers and mysteries, and the Alliance of Saint Michael novels; and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.
The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
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