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Thursday, March 9, 2023

Iger on Rationalization, Curating and … Hulu

 by Ray Keating



March 9, 2023


Disney CEO Bob Iger was interviewed at The Morgan Stanley Technology, Media And Telecom Conference on Thursday, March 9, and he raised more questions than answers about the future of Hulu.

Iger noted that he was “extremely bullish” on streaming in general, including Disney+ and ESPN, but when it came to Hulu, he spoke of “studying it carefully.” He declared that it was a “good platform” that had a “good library,” as well as it being “attractive” for advertisers. But Iger added that he and the company were still trying to figure it out regarding Hulu within a “tricky environment.”


As we noted in July of last year, “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.” 


We also noted that, at the time, Hulu was viewed either as “a leader and an opportunity for Disney, or a potential financial burden.” The fact that Disney is still trying to figure out Hulu speaks to it being more burden than opportunity – but as we’ve seen over the last few years, views on streaming can change quickly.


Overall, Iger’s streaming emphasis was on establishing a “pricing strategy that makes sense,” as part of a “rationalization” process. That is, while subs need to grow, what Iger sees as “skyrocketed” costs must be, and are being, dealt with. He noted a need to do more marketing of programs, rather than the platforms.


Along these lines, he spoke of curating, that is, being more judicious in terms of how much to spend, on what, and making quality the differentiator, rather than volume.


As for particular brands within the Disney universe, Iger raised the question of how many times should Marvel do sequels, as opposed to tapping into more of the “7,000 characters” that it purchased in the Marvel acquisition.


And on the Star Wars front, he reiterated being “careful” in developing both streaming shows and movies.


As for the theme parks, Iger clearly was bullish, saying it was a “great” and “resilient” business. He noted the need, again, to be smarter on pricing, that is, balancing making it accessible to families, while also limiting the number of people in the parks at any time to ensure a quality experience and to maintain profitability. That’s no easy task, and one of the reasons that CEOs get paid the big dollars.


Disney fans, no doubt, will be pleased by Iger mentioning that creating new attractions means being able to expand attendance by giving people more things to do. He also mentioned that Disney had more opportunity to expand in California’s Disneyland than many might assume.


As for economic challenges, Iger seemed confident in the company’s ability to deal with both recession and cost pressures.


Finally, regarding a successor, Iger noted the process is ongoing, and it was his wish to leave the company on “a trajectory that is optimistic and positive.”




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? 


Consider books by Ray Keating…


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• The Pastor Stephen Grant thrillers and mysteries. The latest in the series is Persecution: A Pastor Stephen Grant Novel. Get the signed books here, or paperbacks and Kindle editions right here.


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