Disney CEO Bob Iger appears to have shifted strategic course on Hulu, revealing that “cordial” and “constructive” discussions have started with Comcast about Disney acquiring its one-third stake in the streaming service.
“I mentioned on the first earnings call that I did [in February] when I came back that everything was on the table, and in fact everything was on the table,” Iger said on the company’s fiscal second quarter earnings call. “I’ve now had another three months to really study this carefully and figure out what is the best path for us to grow this business.”
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He added a caveat. “It has not yet been fully determined what’s going to happen,” Iger cautioned. But he described a significant evolution in his thinking about the matter, following comments earlier this year that poured cold water on the viability of “undifferentiated” general entertainment streaming compared with the potent brands found on Disney+.
The deadline is less than a year away for a put/call option on Comcast’s stake, whose value has been set at a minimum of $9 billion. While spending such a hefty sum isn’t a casual matter as the company works to whittle down costs, Disney would be wise to pair general entertainment from Hulu with Disney+ fare from tentpole brands like Marvel and Pixar, Iger believes. Already, the company plans to combine the two into a single app this year. Acquiring all of Hulu would enable more proceeds to flow to Disney’s bottom line.
“t’s clear that a combination of the content that’s on Disney+ with general entertainment is a very strong combination, from a subscriber perspective, from a customer acquisition and retention perspective, and also from an advertiser’s perspective,” Iger said.
He stopped short of revealing even a preliminary agreement to buy the stake. “How that ultimately unfolds is to some extent in the hands of Comcast and in the hands of a conversation and negotiation that we have with them,” he said. “I don’t want to be in any way predictive in terms of when or how that ends up. I can say we’ve had some conversations with them already and they’ve been cordial and they’re aimed at being constructive.”
Prior to Iger’s return as CEO in November 2022, Comcast brass and previous Disney chief Bob Chapek had expressed their views in Wall Street settings in recent months as the public got glimpses of one of the biggest chess matches in media. Hulu was formed in 2007 as a joint venture between Fox and NBC. Disney and minority partner Time Warner eventually joined in as traditional companies sought a presence in streaming in the early days of Netflix and Amazon also starting to go direct to consumers.
The comments from Iger came during a newsy quarterly earnings call. After the company posted solid numbers driven by a theme-park rebound, Iger announced that Hulu content would be added to Disney+ in a “one app” offering by the end of the calendar year. That move will involve both price increases and “rationalizing” of the company’s streaming content, in terms of volume and investment. CFO Christine McCarthy said the company expects to take an impairment charge of $1.5 billion to $1.8 billion due to the revamp.
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