The fate of Hulu is still up in the air, Disney CEO Bob Iger said Thursday.
Speaking at the Morgan Stanley Tech, Media and Telecom conference, Iger said the company is continuing to evaluate the best option for Hulu, which he praised as a strong platform, but one that features “undifferentiated” entertainment content, compared to what he sees as the highly differentiated content on Disney+. The company is said to have hired Goldman Sachs to explore strategic options for its stake in Hulu, which could include a sale. Starting in January 2024, Comcast can use its put option to require Disney to buy its stake, or Disney can use its buy option to tell Comcast to sell its stake.
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“What we’re doing right now — because we own two-thirds of Hulu, and we have an agreement with Comcast that may result in us owning 100 percent — is we’re really studying the business very, very carefully, all those competitive dynamics with an understanding that we have a good platform in Hulu,” Iger said.
“We have very strong original programming, actually highly awarded original programming, some delivered by FX, which is a great not only producer but brand, and we also have a good library, so it’s a solid platform. And it’s also a very attractive platform for advertisers. It’s already proven to be valuable for them and advertising is proven to be valuable for us. But the environment is very, very tricky right now and before we make any big decisions about our level of investment, our commitment to that business, we want to understand where it could go,” he continued.
Comcast CEO Brian Roberts has also expressed an interest in owning Hulu outright — though many saw his comments about wanting to own the streaming platform as a move to drive up the price of his company’s stake.
Iger also spoke to what he sees as the current state of the streaming landscape, joking that all platforms say they will soon be profitable, but that “not everybody’s going to win.”
“Every one of them is going to be highly profitable in a couple of years, and grow subs by the tens of millions? It can’t possibly happen. There are six or seven, you know, basically well-funded, aggressive streaming businesses out there all seeking the same subscribers, in many cases competing for the same content. Not everybody’s going to win,” he said.
As for Disney’s streaming prospects, Iger said he remains “extremely bullish,” particularly on Disney+. To get the segment to profitability, the company will be focused on trying to “figure out a pricing strategy that makes sense” for the platform, which Iger said could include taking a harder look at promotional pricing and free trials.
“In our zeal to grow global subs, I think we were off in terms of that pricing strategy. And we’re now starting to learn more about it and to adjust accordingly,” he said.
The other areas for revenue growth will come from the newly launched advertising tier on Disney+, which Iger called “an advertiser’s delight,” given the brand and the audience engagement, as well as the expectation that there is still more subscriber growth ahead.
“We grew at such a meteoric rate, we’re not going to see that kind of growth trajectory going forward,” Iger said. “But in many of the markets outside of the United States that we’ve launched in, it’s still very, very new. And I think that there’s sub growth ahead, particularly as we get more consistent in terms of our content delivery.”
