Confirmed: Disney Open to Selling Hulu as Part of General Entertainment Pullback
Massive changes could be on the way for one of the oldest streaming services in the industry. Disney CEO Bob Iger appeared in an interview on CNBC on Thursday and indicated that “everything is on the table” when it comes to the company’s general entertainment streamer Hulu, including a possible sale of the 66.7% of that service that Disney currently owns.
Those comments are the first confirmation that Disney is open to the idea of unloading Hulu. Former CEO Bob Chapek frequently stated his desire to purchase the remaining 33% of the service from Comcast, but Chapek was removed from the executive position in November, thanks in part to Disney’s growing losses from its streaming segment.
The company brought back beloved former CEO Iger in order to right its fiscal ship. The reinstated exec made clear during the company’s earnings call for its fiscal first quarter on Wednesday that general entertainment was firmly in his crosshairs as the company laid out restructuring and refocusing efforts meant to shore up its bottom line.
“General entertainment is generally undifferentiated as opposed to our core franchises and our brands which because of their differentiation and their quality have delivered higher returns for us over the years,” Iger said. “So we think we have an opportunity to, through more aggressive curation, to reduce some of our costs in the general entertainment side and in general, in volume.”
That certainly sounds as if Disney is getting ready to make some big cuts to Hulu’s content budget, at the very least. Of course, the company has linear channels — ABC, Freeform, FX, and others — that fall into the general entertainment category, but having lost $1.5 billion in the quarter before Iger regained control certainty makes it appear as if he was brought back to clean up that side of the business. But thanks to Iger’s comments on Thursday, there can be no doubt that the company is open to making extremely big changes if it gets the right offer.
If Disney does sell Hulu, it will vindicate some industry analysts who think the time is now to make such a move. Disney could make tens of billions of dollars off such a sale, and with the $5.5 billion in company-wide savings Iger is currently seeking, a quick infusion of cash would certainly help matters.
But how valuable is Hulu, really? Disney and Comcast agreed on a minimum valuation of $27.5 billion for 33% of the company, but that was in 2019. However, despite significant growth for the service — and streaming as a whole — since then, last year, the service had just four top 10 TV hits according to Nielsen, while Netflix claimed over 200. Still, Hulu’s 48 million subscribers would be an undeniable asset if Disney were to try to sell it off, and one of its biggest suitors in such a deal could be FOX, which once had a one-third ownership of the platform.
FOX recently extended its deal with the platform to continue sending next-day streams of primetime shows to Hulu for multiple years. FOX Corp. CEO Lachlan Murdoch called the FOX-Hulu relationship “symbiotic” earlier this week, and his company has signaled it is ready to make a big splash in the mergers and acquisitions realm at some point this year.
Other comments from the Disney earnings call make it seem less likely that a sale of Hulu is in the near-term cards, however.
“As I’ve talked about getting more aggressive at curating general entertainment — by the way, we’re not getting out of that business, but we’re going to curate it more,” Iger said. “We have opportunities using the great talent that we have to create for third parties, and we’re going to look at that very seriously. I actually think there’s a nice opportunity to create a growth business for the company, but it’s way too soon to predict what that can be.”
From those comments, it sounds like Iger is more interested in licensing Hulu and other general entertainment series to third parties than it is in simply cutting ties with the service altogether. Reports of Disney shopping content to other media companies surfaced in the days before the earnings release, and those reports were confirmed by Iger himself.
Hulu now finds itself in a state of flux. Iger used the word “aggressively” four times to describe how much general entertainment would be “curated,” so users might be wise to prepare themselves for their favorite show to be canceled or licensed to another service, or for the platform to just have fewer originals in the future. If cuts and new licensing deals aren’t enough to help Disney’s balance sheet, however, a sale of Hulu to another media company is a serious possibility.
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