Disney+ Officially Adds Hulu In Beta Launch Of ‘One-App Experience’; Full Rollout Set For March 2024
Disney has added Hulu as a sixth vertical on the home screen of Disney+, with the integrated “one-app experience” officially launching today in beta. Plans call for the full rollout of the combined app next March. The launch scheme, initially announced last month during Disney’s quarterly earnings call, comes as Disney is in the process of buying out Comcast’s one-third stake in Hulu and becoming its full owner.
Disney today named Hugh F. Johnston its new chief financial officer as of Dec. 4, replacing interim CFO Kevin Lansberry, who will return to his position as EVP and CFO of the company’s Experiences segment. The appointment of a new CFO fills a key leadership role as Disney faces a number of challenges, both financial and strategic.
The return of Loki to Disney+ didn’t cause quite as big a stir as the show’s debut. Season two of the Marvel series premiered Oct. 5, and it gathered 446 million minutes of viewing time over its first three days and change (it was released at 9 p.m. ET/6 p.m. PT Oct. 5 in the United States), according to Nielsen’s streaming rankings. That’s about 39% lower than the 731 million minutes of viewing for Loki’s series premiere week in June 2021.
One day after the Disney and Comcast co-owned streamer went on the market, Disney is buying the remaining 33% stake in Hulu for $8.61 billion. While there will be some hoops for Disney to jump through to complete the purchase, the company is predicting the deal will be completed “during the 2024 calendar year.”
Starting on Nov. 1, an option to begin the deal process for the 33% stake in the streaming platform — expected to be worth north of $9 billion — can be triggered.
Ferro says that 50% of new Disney+ subs are choosing the ad tier, as the company is set to launch it in global markets next month.
Comcast and Disney have hired investment banks to value Hulu, the next step in what’s been a nearly five-year process to put the streaming service under one owner. Comcast, which owns one-third of Hulu, has hired Morgan Stanley, and Disney, which owns the other two-thirds, has hired JPMorgan Chase. Each bank is tasked with providing a fair value for Hulu — a condition of an agreement set up in 2019 that allows either Disney or Comcast to trigger an option forcing Disney to buy Comcast’s 33% stake.
Net-net, Charter will be paying more to Disney, with the increase in wholesale fees for streaming exceeding cuts in payments for cable networks that are being dropped, most analysts have concluded. MoffettNathanson analyst Robert Fishman looked at the Charter deal and has tried to game out how a similar deal would work out for other media companies.
The company to become the latest streamer to lift fees; Disney weighs launching a new live-sports tier abroad.
New account-sharing rules for the streaming platform are set to take effect Nov. 1 north of the U.S. border, with U.S. subscriber agreements to be updated later this year.
Charter CEO Chris Winfrey indicated that little progress has been made in the week-long carriage fight with Disney and said a leaner, ESPN-free TV bundle “could stick” with price-sensitive Spectrum customers. The exec updated investors on the epic distribution battle during a keynote session at the Goldman Sachs Communacopia + Tech Conference in San Francisco. “If I had anything material to highlight, I would,” he said of the negotiations. “So that should tell you something.”
Disney has seen a 60% jump in Hulu + Live TV subscriptions relative to internal expectations since a carriage impasse with Charter began, according to figures provided to Deadline by a Disney spokesperson. Last Thursday, 18 of Disney’s cable networks and eight ABC stations went dark on Charter’s Spectrum service in one of the most contentious and consequential TV carriage disputes in memory.
Paramount Global CEO Bob Bakish said the Disney-Charter carriage dispute took a “notable” financial toll on many pay-TV stakeholders, but he touted his efforts to “modernize” the company’s distribution relationships for the streaming era. Speaking at the Goldman Sachs Communacopia + Tech Conference, Bakish said last Friday was “obviously a notable day for the industry.” That was the first trading day after 18 Disney cable networks and eight ABC stations went dark on Charter’s Spectrum TV service. It brought a collective $15 billion hit to the market value of a number of programmers and operators, Bakish estimated, as the carriage impasse “was interpreted as a negative” by investors. Nevertheless, he continued, “all companies are not of the same point of view” when it comes to co-ordinating their efforts across linear TV, streaming and other lines of business.
The suit argues Charter consumers are essentially being held hostage by the cable powerhouse, which is looking to change the economics of pay TV.
After pushing back his retirement four times, Bob Iger finally made the leap. On Feb. 25, 2020, he announced he would step down as Disney’s CEO. His hand-picked successor, Bob Chapek, then Disney’s parks chairman, would take over the day-to-day job of running the company, effective immediately. As part of the changing of the guard, the Disney board suggested the new CEO should take over Iger’s expansive office at Disney headquarters in Burbank, California. There was just one problem. Iger had no interest in moving out.
Wall Street analysts say that the rift can result in a migration of subscribers and could even tip Hollywood’s power structure.
Comcast and Disney have modified their Hulu agreement to enable the expected buyout of Comcast’s one-third stake in the streamer to begin on September 30 instead of next January. The news was shared at a Goldman Sachs conference appearance by Comcast CEO Brian Roberts, who said the initial minimum valuation of $27.5 billion for Hulu agreed to in 2019 was “just a hypothetical.” He suggested the final price tag could be much higher. Roberts said both companies “wanted to get this behind us,” so they reached an agreement last week to accelerate the timeline.
The Disney-Charter carriage battle is foregrounding the fragility of the pay-TV bundle. Charter’s Spectrum TV service is in its fifth day of darkness as the companies fight over carriage terms, leaving nearly 15 million customers without access to 18 Disney networks, including ESPN, as well as eight ABC stations.
Whoopi Goldberg was absent from the Season 27 premiere episode of The View today due to yet another case of Covid, though many usual viewers throughout the country will miss the show too: The View did not air today in markets impacted by the ongoing clash between Disney and Spectrum. In New York City, for example, where the daytime series originates, viewers attempting to tune into the show were greeted with the same Spectrum message that’s been on the ABC affiliate channel all weekend: “The Walt Disney Company, owner of this channel, has removed their programming from Spectrum,” the message begins. “We offered Disney a fair deal, and yet they continue to demand an excessive increase.”
The battle between Charter Communications and Walt Disney, spurred due to cord-cutting, is now getting very tangled. Charter suggested last week that it might be ready to cut Disney networks from its programming lineup after the two companies reached an impasse in talks to extend their carriage contract. Now Disney is hinting to Charter subscribers that they might want to cut their connection with the large cable distributor.
Is ABC Really For Sale?
A tipping point for the broadcast industry is coming, and part of it hinges on a problem that Disney chief Bob Iger created for himself.
Shares of several big media and entertainment companies tumbled Friday as investors considered the potential fallout from an impasse between cable giant Charter Communications and media titan Walt Disney Co. On Thursday, Disney said it had pulled major networks such as ESPN and ABC from Charter systems after the two companies could not come to terms on a renewal of their carriage license. Charter’s systems reach a little under 15 million subscribers in markets that include New York City and Los Angeles.
Addressing Thursday night’s carriage impasse with Disney, Charter Communications executives told Wall Street investors on a conference call today that their linear video business is “at the edge of a precipice.” Charter CEO Chris Winfrey said any resolution to the outage, which left almost 15 million customers in the dark at the start of football season, would need to happen quickly. Otherwise, he said, Charter will take pains to preserve broadband relationships with customers who drop video service.
ESPN and 18 other Disney networks as well as ABC stations have gone dark across Spectrum, the No. 2 cable TV service in the U.S. Charter Communications, which runs Spectrum, and Disney had been locked in a distribution dispute since well before the U.S. Open tennis tournament began this week. In the coming days, college football and the NFL will kick off, potentially putting two massive sports properties on the list of programming unavailable to Spectrum customers. Along with the ESPN family of networks, the carriage fight also involves FX and a number of non-sports networks as well as ABC stations.
Remi Yamamoto, who most recently served as special assistant to President Biden and senior advisor for the White House chief of staff, has joined Disney Entertainment Television as vice president, Media Relations. She will report directly to Naomi Bulochnikov-Paul, EVP Publicity, and Head of Communications for Disney Entertainment Television. (Image: ABC/Michael Kirchoff)
Verizon is the latest player to have discussions with Disney about ESPN’s future. Disney has had preliminary talks with Verizon focused on creating a new ESPN streaming service. Verizon is already a key distributor for Disney, with deals that include a current one offering the Disney bundle (Disney+, Hulu with ads and ESPN+ with ads) for a discounted $10 per month to Verizon MyPlan customers.
The average cost of watching a major ad-free streaming service is going up by nearly 25% in about a year, as entertainment giants bet that customers will either pay up or switch to their cheaper and more-lucrative ad-supported plans.
A growing consensus is forming among Wall Street analysts, former employees and industry experts that Disney should split in two
The buzz about bundling has been steadily growing in TV industry circles since May, when Warner Bros. Discovery CEO David Zaslav took a break from his usual mustache-twirling to lay out a case for why companies with streaming platforms needed to get on the ball and figure out a way to package their respective services together in one consumer-friendly package — a.k.a. a bundle.
Walt Disney Co. has created a task force to study artificial intelligence and how it can be applied across the entertainment conglomerate, even as Hollywood writers and actors battle to limit the industry’s exploitation of the technology. Launched earlier this year, before the Hollywood writers strike, the group is looking to develop AI applications in-house as well as form partnerships with startups, according to three sources.
The Disney-controlled channel is trying to find a way forward in the streaming age and has had discussions with the NFL, the NBA and Major League Baseball.
If Disney Sells Off TV, It Won’t Be Simple
If CEO Bob Iger follows through on his desire to sell off the company’s linear TV business, the sale is likely to happen in pieces, experts say, and any potential buyer among broadcasters faces numerous complications.
Eight months after returning as Disney’s CEO, Iger is straining to put out fire after fire, including streaming losses, an activist investor and TV woes.
Disney CEO Bob Iger opened the door to selling the company’s linear TV assets as the business struggles during the media industry’s transition to streaming and digital offerings. Iger appeared on CNBC on Thursday, the morning after the company announced it would extend his contract by two years through 2026. He returned to the helm of the company in November after Disney’s board ousted Bob Chapek with a two-year contract through 2024 and plans to find a next successor. Disney is going to be “expansive” in its thinking about the traditional TV business, leaving the door open to a possible sale of the networks. “They may not be core to Disney,” Iger said, adding the creativity that has come from those networks has been key for Disney.
The first half of 2023 has been a colossal disappointment for media executives who wanted this year to be a rebound from a terrible 2022, when a slowdown in streaming subscribers cut valuations for Netflix, Disney, Warner Bros. Discovery and Paramount Global roughly in half. Instead, investors have once again become excited by Netflix’s future prospects as it’s cracked down on password sharing, potentially leading to tens of millions of new signups. Netflix shares have surged the past five months, outpacing the S&P 500. Meanwhile, the legacy players can’t get out of their own way.
Marvel’s Secret Invasion is already causing a commotion on social media, though not for reasons that the studio may have hoped. The series, which debuted on Disney+ on Wednesday with just one episode, has touched a sore spot after director Ali Selim confirmed to Polygon that the opening credits were generated by artificial intelligence. Designed by Method Studios, Selim said he thought that the idea of using AI for the opening credits fit into the themes of the show.
Disney’s chief diversity officer and senior vice president Latondra Newton is exiting her role after more than six years, according to an internal memo. An individual with knowledge of the situation says that Newton will be joining the corporate board of another company soon, and plans to devote more time to her self-owned creative company.