What Is Going On With Hulu?
There is a lot fist shaking going on about Hulu rejected a political ad for the Democrats but then turning around and accepted “some” political ads.
Most of the yelling was about how Chapek was backpedaling again, like he did on the Florida Anti-Groomer law.
A lot of people were asking how long will Disney keep doing this?
Wrong question.
The question I had was, why is this happening now?
This is July. Political ads won’t start in any serious way until after Labor Day. That is when $8 billion in ad money is going to start carpet bombing all ad space kind.
Why is this happening now, in July?
Answer: Disney does want in on this $8 billion ad money flood. They need to get in on it, given how Marvel Phase IV is at least $100 million in the hole. And, yes that means streaming ads from both parties.
What has happened is that an “artificial conflict” has been created.
It’s a fairly common business practice where both sides want the same thing, but are blocked by a legal restriction (a prior agreement that can’t be broken, or conflicting rights issues, or something like that). Whatever that something is, you and your “opponent” have a need to get this restriction in front of a judge so he can resolve it. In this case, my money would be on an FEC regulation.
The reason they are doing this now is that Disney and the Democrats and the Republics want this problem ironed out by Labor Day. They want a process in place and functioning by then.
Interestingly, Disney’s internal policy is that there will be NO political ads played at all on Disney+. So Chapek is leaving some money on the table there because D+ is a lot bigger than Hulu.
Which is fine for this election cycle, but Disney has a major issue coming up with Hulu that they have to make a decision on.
When Disney bought out its other partner in Hulu (Fox), a deal was put in place with the remaining stakeholder Comcast. They would go silent as a partner, but Disney would have to buy them out by 2024 for $27.5 billion. All well and good. It was part of Iger’s master plan to buy the entire Earth.
The thing is when that agreement was set up. It looked for all the world like streaming was an infinite frontier. There would be a limitless number of streaming services and they would all make whole bunches of greenbacks forever and ever, amen. The business model at the time suggested a world where studios would have a bunch of specialized channels and one or two main *channels.
That was then.
The zero-sum game reality of streaming has come crashing down into place. The future isn’t streaming diversity it is in streaming aggregation. The Warner Brothers has eliminated, sold off, or consolidated all of its streaming services except HBOmax. MGM rolled its services into Epix before getting snapped up by Amazon. MGM’s movies left Hulu back in March and **Paramount’s movies followed suit. Universal’s content is going to leave Hulu for Peacock and that leaves the question of what the hell does Mickey the Great and Terrible need Hulu for?
This has got to be a major question at Disney right now. $27.5 billion is way too much for what Hulu brings to the party. Especially given how heavy Disney’s debt load is. It does bring in about $4 billion a year in gross revenue. That said, I’ve noticed that stuff like the Orville is about to pop up on Disney+. Hulu’s content can be transferred to Disney+ easily enough but will its audience go with it? What if it does? This circles back to the question of what the hell does Disney need Hulu for?
Political commercials?
*It is possible that these projections weren’t wrong just premature. Right now, the biggest restriction on channels may be the inflated cost of high-speed internet.
Starlink and its competitors may well knock a hundred bucks off of Comcast’s monthly bill. Which would free up some household entertainment budgets for (maybe) more streaming services.
**If Paramount get bought up by Apple it will be around Labor Day. That is a big IF.
