Disney CEO Bob Iger on Wednesday announced Hulu would be integrated into Disney+ in the U.S. as a “one-app experience.” A Hulu tile is likely coming to Disney+ soon, as early as the end of the year, and it almost certainly means one more thing: Disney will buy out Comcast’s one-third stake in Hulu.
“This is a logical progression of our [direct-to-consumer] offerings that will provide greater opportunities for advertisers while giving bundle subscribers access to more robust and streamlined content, resulting in greater audience engagement and ultimately leading to a more unified streaming experience,” Iger said on the company’s fiscal second-quarter earnings call.
After months of uncertainty surrounding the existential question of Hulu (Disney? Comcast? Auction?), Iger is excited. Hulu can beef up Disney+, reduce churn, and make it a sexier platform (literally, via Hulu’s adult-oriented content, and figuratively as a more versatile offering). Why would he spend the enormous time and expense of integrating the apps by the end of 2023 only to lose Hulu in January 2024?
Still, don’t take it from us; ask the analysts, whose jobs rest on telling investors what corporations will do next. Any doubt about what Disney is going to do here?
“Zero,” UBS media and entertainment analyst John Hodulik told IndieWire about Iger’s intentions in buying out Comcast’s Hulu stake.
“Iger was pretty specific. He needs it to create more value for the overall [direct-to-consumer] offering,” nScreenMedia chief analyst Colin Dixon told us.
Barton Crockett of investment bank Rosenblatt Securities agreed with those guys in a Thursday morning note to clients: “Disney basically said it has decided to swallow the $9.2 billion cost to buy out Comcast’s 1/3rd stake in Hulu at the start of 2024, by saying it plans to launch an integrated app for Hulu and [Disney+]. That only makes sense in a buyout.”
It sure does — although Iger isn’t going that far, yet. “It has not really been fully determined what will happen in that regard,” he said during the earnings call’s Q&A. Sure, Bob. Well, at least one thing is “clear,” he acknowledged.
“It’s clear that the content that is on Disney+ with general entertainment [emphasis Iger’s] is a very strong combination from a subscriber perspective, from a subscriber acquisition, subscriber retention and also from an advertiser perspective,” Iger continued, leaning hard on that Hulu descriptor though purposefully not using the word “Hulu” itself. “So where we are headed is for one experience that would have general entertainment and Disney+ content together.”
We’re not sure what other “general entertainment” streaming option Iger might have, but this is all part of the ongoing negotiations.
“How that ultimately unfolds is to some extent up to Comcast,” Iger continued. “I don’t want to be in anyway predictive in terms of when or how that ends up. I can say we’ve had some conversations with them already. They’ve been cordial and they’re aimed at being constructive, but I can’t really say where they’ll end up, only to say there seems to be real value in having general entertainment combined with Disney+, and if ultimately Hulu is that solution, we’re bullish about that.”
A Comcast rep did not immediately respond to our request for comment on an update from their position. When reached, a Disney spokesperson declined to elaborate on Iger’s remarks.
The integration of Hulu into Disney+ is an obvious next step for their respective futures, which don’t seem so respective anymore. Much of Hulu’s content is already available on Disney+ internationally through Star, and Iger says it’s “working quite well,” thank you. But who would have thought Disney would follow the Paramount playbook?
Paramount Global slowly but surely brought its Showtime and Paramount+ together. By September, the two will become one as “Paramount+ with Showtime,” with the Showtime app shutting down for good. Its rebranded linear-cable channel may follow suit. These changes are expensive: It has cost Paramount $1.7 billion so far to merge Showtime with Paramount+, and the company this week laid off 25 percent of the combined Showtime, MTV Entertainment Studios, and Paramount Media Networks teams.
Perhaps a better comparison for the future Disney+ with Hulu is the Warner Bros. Discovery umbrella. There, it has taken more than a year to combine Discovery+ and HBO Max into what is soon to be called just “Max.” WBD isn’t dismantling Discovery+; it’s still making money and is a good alternative for people who don’t want all the HBO shows and movies. We expect Hulu, which has a unique “Live TV” plan and a hell of a lot more subscribers (more than 48 million) than Showtime OTT or Discovery+, would continue to be offered as a standalone.
Hulu and Disney+ are already available together, as two separate apps, as part of the popular Disney Bundle. A customer also has the option to add in ESPN+.
Disney previously guaranteed to Comcast a minimum total equity value of $27.5 billion for Hulu, which makes Comcast’s one-third share worth at least $9.17 billion. And with a price tag that high, it makes sense that Iger took some time to think this over.
“I said back then that everything was on the table, and in fact everything was on the table,” he said on Wednesday, referencing remarks he made on the company’s prior quarterly earnings conference call. “But I’ve now had another three months to study this carefully and figure out what is the best path to grow this business.”