Colin Dixon, founder and chief analyst with nScreenMedia, believes mistakes were made with Hulu under Chapek’s watch. Like, why un-Disney Disney+ when Hulu was right there? Hulu needs content too, and Dixon echoes the sentiment that Disney needs an adult brand in the U.S. to match what its Star brand represents in the rest of the world.
Iger wouldn’t have done that, nor would he be as obsessed with quickly making Disney+ huge and profitable.
“The commitment to make [direct-to-consumer] profitable by 2024 was a mistake. This is a marathon, not a sprint,” Dixon said. “[Hulu’s] engagement times are great, churn moderate, and it has established a solid ad business. It will be Hulu that leads Disney’s DTC business to profit in the U.S. Iger bought Hulu and recognizes its value.”
Even if Iger buys out the remaining share, what he ultimately does with Hulu is another question. Some of the possibilities:
Disney sells its controlling stake in Hulu to Comcast
This one is a long shot for a couple of (billion) reasons, but let’s start with why it could make some sense. Steve Birenberg, principal with Northlake Capital, says acquiring Comcast’s stake in Hulu could require Disney to take on a substantial amount of debt, though they have the balance sheets to do it. And if Hulu is worth $27.5 billion (a giant IF, and one that Disney is kind of locked into), having $18 billion-plus of Comcast’s cash come in the door wouldn’t be a bad way for Iger to make a good impression on investors. This route could let Disney chart a path not unlike that of HBO Max.
“Disney would downsize its streaming ambitions to be a more premium service, offering those key brands and potentially could operate at a healthier profit margin, but a much smaller ultimate dollar profits, so it wouldn’t have as big of a potential reach,” Birenberg said. “But that would be a pretty major step back… Look at the acquisitions [Iger] has made. The last thing he did was buy the Fox assets; he wouldn’t have bought the Fox assets if he didn’t have bigger ambitions for Disney streaming.”
Like Iger, Comcast chief Brian L. Roberts has the money. In September, he threw out this very alternative: What if we bought them out?
“If [Hulu] was for sale, put up for sale, Comcast would be interested, and so would a lot of other tech and media companies,” Roberts said. “And you would have robust auction. There’s never been a pure-play, fabulous, scaled streaming service put on the market.”