Two years ago, Disney chief Bob Iger floated the question in an interview on CNBC whether the company’s TV channels — including ABC, the ABC station group, Disney Channel, NatGeo and FX — were no longer “core to Disney.”
On CBNC’s “Squawk Box” Tuesday, Iger was back for a talk with the network’s David Faber. And this time, the Disney CEO positioned the conglomerate’s stable of linear networks as an advantage over rivals.
Iger’s comments came a day after Warner Bros. Discovery announced it would split the company in two, with one half comprising largely WBD’s U.S. cable networks and the other consisting of its streaming and studios businesses. Comcast, meanwhile, has announced plans to jettison NBCUniversal‘s cable networks (excluding Bravo) into a new, publicly traded company called Versant by the end of 2024. One of the networks set to become part of Versant, incidentally, is CNBC.
Regarding WBD and Comcast/NBCU’s planned cable spins, Iger said that “it’s also interesting to us that as many others exit that business, I think it gives us a stronger hand to stay in that business. You know, we’re very focused. We will have, interestingly enough, a linear television business that’s paired with a streaming business. So, when you think about it, these spinoff companies won’t have the assets from a streaming perspective that we will have. Again, I think that gives us an advantage.”
That said, Disney has undergone multiple rounds of layoffs across its TV divisions. In May 2024, Iger said at an investment conference that Disney would “reduce pretty dramatically our investment in content specifically aimed at those traditional networks.” At the time, Iger said the conclusion he reached after reviewing Disney’s TV business when he returned as CEO in the fall of 2022 was that “it’s not a growth business, but it could become an important component to our ability to basically engage with the consumer.”
During Tuesday’s CNBC interview, Iger said that in 2023, soon after he returned to Disney as CEO, “I put everything on the table and asked the team to evaluate” two questions: whether Disney should buy Hulu or sell it, and whether the company “should sell our linear television networks or whether we should hold on to them.”
According to Iger, after “a pretty lengthy process internally and really taking a long look at what these properties could mean to us long term, we decided that the best course for us to take was to not only hold on to Hulu and buy it in its entirety but also to hold on to the linear television networks and to integrate them seamlessly with our streaming business.”
Love Film & TV?
Get your daily dose of everything happening in music, film and TV in Australia and abroad.
He said that there are still enough U.S. pay-TV subscribers “to generate a significant amount of revenue” form the dual revenue stream of advertising and subscription fees. Iger said Disney manage its TV networks in one organization and “we also aggregate audiences for marketing purposes.”
The combination of streaming and linear TV, according to Iger, “is actually a winning combination for us. It’s one of the things that’s enabled us to turn the streaming business around from a huge loss to profitability, and over the next several years it will enable us to grow margins significantly on the streaming side because [of], again, the ability to amortize program costs and the ability to essentially aggregate audiences and revenue.”
Iger then rattled off specific examples of TV-streaming synergy: ESPN’s forthcoming stand-alone streaming service “will be connected, obviously, fully with ESPN’s digital offering.” He claimed that Disney Channel is “connected seamlessly” with Disney+ (with which NatGeo is also connected), and that FX and ABC “have fed Hulu programming very effectively.”
“When you think about those five networks and how they’re programmed across linear and streaming, you’ve got a business that actually provides us an opportunity to not only grow, but to grow margins in the process as well,” Iger said. “So again, we like the direction we’re going. We like the fact that we’re one of the few [companies] that is doing this, because I think it sets us up to be even more competitive in a marketplace that’s becoming even more fragmented.”
Iger addressed Disney’s just-closed Hulu deal with Comcast, in which Disney bought out NBCU’s 33% stake to finally acquire 100% ownership of the streaming service. He noted that if the third-party appraiser in the mediation had “come up with a number that was closer” to that which Comcast’s banker had picked, “this could have cost us $5 billion more.” Instead, Disney is paying an additional $438.7 million (in addition to the $8.61 billion it already paid) for NBCU’s Hulu stake.
“So obviously, we’re very pleased with this result. But now we’re focused on doing what we intended to do once we gain full control of [Hulu],” Iger said. “And that’s basically to put these apps together seamlessly, to create an experience for the consumer that’s easier to use, easier to buy, to increase engagement, to lower churn, to grow subs, and ultimately to consolidate more and to save some money in terms of the operation.”
Disney Closes Hulu Deal With Comcast, Paying Billions Less Than NBCU Was Seeking
From Variety US