February 07, 2023
Good morning, Media Deals readers!
🏈 Situational awareness: The NFL signed a 10-year deal with DAZN Group to make DAZN the exclusive streaming home for NFL Game Pass International beginning next season.
1 big thing: Whither Hulu
Expect Disney to crystallize its strategy for Hulu this week as the company reports its first earnings since Bob Iger’s return as CEO, Tim writes.
Why it matters: Hulu's fate is a $27.5 billion question for Disney that has hung over the company ever since Disney acquired majority control of the streaming service in 2019.
- Disney is on the hook to buy out Comcast's 33% stake in Hulu — each side holds an option to trigger the deal — as soon as 2024 at a minimum valuation of $27.5 billion.
What's next: Disney will report its earnings tomorrow after the bell. Discussion about Hulu and Disney's proxy fight with Trian Partners figure to dominate the call.
- Trian's proxy battle will come to a head during the shareholder meeting on April 3.
The intrigue: It had long been assumed that Disney would end up owning all of Hulu by sometime next year, but Iger's surprise return last November to replace his replacement has muddied the picture.
- Last week, Bloomberg reported that Disney was looking to license its film and TV shows to other networks and streaming services, a dramatic shift from the company's push to keep all of its content exclusive to its own platforms.
- At least one analyst believes the move is a precursor to Disney offloading Hulu, with Comcast as an obvious suitor.
- "We sense investors would view a Disney sale of Hulu quite favorably as it would clarify their streaming strategy, reduce leverage and improve DTC profitability. That said, most investors struggle to see a logical buyer of Hulu beyond Comcast," Rich Greenfield of Lightshed Partners wrote this morning.
Be smart: This is not the first time Greenfield has argued for a Hulu sale.
- Comcast execs have previously said they'd be open to buying Hulu.
- Trian co-founder Nelson Peltz, who is angling to replace Michael Froman on Disney's board, believes that Disney needs to buy out Hulu as soon as possible or “get out of the streaming business.”
- Yes, but: Any sale would be complicated by the fact that Disney has used Hulu within its popular streaming bundle, which has helped drive subscriptions for Disney+ and ESPN+.