Disney CEO Bob Chapek has doubled down on his intention to quickly acquire Comcast’s stake in Hulu, the world’s largest entertainment company, and that it has no intention of selling or spinning off its profitable sports network ESPN. Is.
Chapek told investors at the Goldman Sachs+ technology conference on Wednesday that he thinks ownership of both Hulu and ESPN will help Disney beat Netflix to become the leading streaming service.
“I believe we must have full ownership of Hulu in order to integrate with Disney+, and we would love to get to the end point first,” he said (reiterating similar statements at last weekend’s D23 Expo). He said). “If we can get there, I’ll be happy to try and facilitate it.”
On industry speculation that Disney might try to sell or spin off its ESPN sports division, he said of course: “Disney is where ESPN can be maximized rather than an asset sitting elsewhere. Selling ESPN.” Or regardless of market demand for closure…we like where it sits.”
That means Disney will have three separate streaming platforms to compete with the entertainment giants in an increasingly more competitive streaming landscape. The company forecasts it will have between 135 million and 165 million core Disney+ customers by 2024, which is when the service is expected to benefit.
No decision has yet been made on whether Disney+ will merge Hulu and ESPN into one platform or offer them as a la carte bundle. The three platforms have a combined 221 million subscribers, but Chapek noted that the company priced its flagship Disney+ at “a very absurd” $6.99 per month when it launched in 2019 — and that’s one reason why it’s so low per user. vs. makes less money for competitors.
One thing is certain, the Disney CEO said, adding that prices will be raised.
“We still have the ability to bundle consumers, and we encouraged people to move to that bundle because the churn is very low,” he said. “It’s a win, win, win. At the same time, we also know that at some point in 2024 there is going to be an option, especially to rethink the way we go to market.
The company announced in August that a price hike was coming to both Disney+ and Hulu in a matter of months, and that an ad-based service would launch on December 8th for $7.99 per month. The current ad-free version will increase by 38% to $10.99 per month.
“I think we’re very low relative to the value we provide,” Chapek said, adding that Disney still has room to raise prices even higher because the ad-free service is still available. will be less than that of the competitors. He wasn’t particularly concerned about pairing Disney+’s raucous clean image with the more adult fare available on Hulu.
“The thing you need to worry about as Disney is brand friction,” he said. “I am amazed at how elastic the brand is. There is more freedom than anyone would expect.”
Of course, Chapek still needs to regain control of wholly owned Hulu — which is 33% owned by Comcast. The cable and entertainment conglomerate, which may also be interested in buying Hulu to beef up its ailing Peacock streaming platform, has the right to sell its stake to Disney beginning January 2024. The stake is estimated to be at least $10 billion.
When it comes to ESPN+, they pledge to “never rush” which is distributed through pay-TV providers as part of their cable offerings. But, Chapek said, “at some point we see the writing on the wall” when it comes to combining live sports programming on its main streaming platform.
Activist hedge fund manager Dan Loeb lost nearly $1 billion in Disney stock last month, reveals in filling a regulator, and urged Disney to shut down ESPN to unlock the cost savings that could be deployed elsewhere. Loeb has since withdrawn his request.
There may be many strategic decisions ahead, but Chapek told investors that Disney has one thing in its favor: “We’re embarrassed of the riches with respect to the abundance coming from our creative engines” that will attract new customers and help existing users. will help maintain it. Busy.
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