Disney’s Hulu Hoop 

Disney’s Hulu Hoop 

Disney, in a move that shocked everyone but honestly shouldn’t have, decided to begin the purchase process for Hulu earlier than was expected. They will begin the process of buying Hulu on September 30th of this year instead of waiting until January 1st of 2024 which was required by Comcast’s call option. 

The reason this should have been obvious is that Disney’s fiscal year always starts on October 1st of each year. There is nothing really weird about this, a lot of companies do it. Hell, the federal government does it. 

I’ve gone over this repeatedly if you are familiar with why Disney has to buy out Comcast’s stake in Hulu skip the italicized paragraphs. 

Okay, here’s some quick background.  A few years ago, a DVD-by-mail service called Netflix decided to start streaming content.  This infuriated the studios because the DVD Bubble economy finally popped at about the same time.  They equated one as being the cause of the other and it really wasn’t.   

The DVD Bubble was the result of Blockbuster Video’s predatory late fee practices making DVD purchases preferable to renting.  $15 a copy was preferable to the possibility of a $30 late fee.  Or you could just pay $8 per month for Netflix (by mail). 

But then several alternatives to purchasing DVDs arrived at about the same time; cable-provided DVRs, Amazon rental/purchase, an inventory-rich used market, and good old-fashioned video piracy courtesy of DVDfab.  Like I said, these all arrived at about the same time which crashed an artificially inflated market.   

But the studios blamed Netflix streaming anyway.  

Consequently, they got together and created Hulu.  It was initially a free streaming service with commercials thrown in.  It didn’t stay free but everyone was expecting that.  It worked for a while.  Hulu was initially a money loser but that turned around and it was making a profit about the time that Netflix started reporting annual revenues of $20 billion. 

It was truly adorable that the entire Hollywood studio system took Netflix at their word for this. The Hollywood Hivemind came to the conclusion that streaming was the future and that they could all make $20 billion a year. 

So, forget about a shared service like Hulu. 

Warner was the first to bail out with dollar signs glowing in their eyes like Daffy Duck. They sold back their stake in Hulu so they could launch their own disastrous HBOmax. That left Comcast/Universal, Fox Media, and Mickey the Great and Terrible as equal partners.   

Disney had a problem with this brave new world.  Disney’s had a very light catalog compared to the rest of the studios.  For most of its early history, Disney just worked on one project at a time.  Walt was more of a super-producer than a studio Mogul.  Bob Iger’s answer to this lack of a catalog was the same as his answer to any problem: BUY SOMETHING NOW!!! 

Iger wanted to buy up Warner but AT&T had their own comically disastrous ambitions in that regard. Universal was already owned by Comcast, so that was out.  Sumner Redstone hopelessly dicked up Paramount’s IP rights when he split the company so that clearly wasn’t worth the money. There was MGM’s back catalog. However, buying up Fox would solve a lot conflicting IP problems with both Star Wars and Marvel.  A decent price looked to be in sight and then Universal started a bidding war.  When the price tag got up to $75 billion it clearly and obviously wasn’t remotely worth the cost. 


Disney paid it. 

There was however a very big problem, it gave Disney an automatic controlling interest in HULU and Comcast wasn’t remotely cool about being demoted from equal to junior partner.  No problem if you are Bob Iger. 


However, having just shelled out $75 (holy shit) billion for Fox, Disney couldn’t afford to buy Hulu outright at the time.  But a deal was reached, Disney would have to pay $27.5 billion for Universal’s remaining stake in Hulu in 2024, (plus some quit-claims on Universal’s Marvel IPs). 

The $27.5 was based on the then-current market value of Hulu ($82.5 billion) when the deal was made. 

Disney has for once received some good news. Comcast/Universal was insisting that Hulu was worth $90 billion and therefore they were owed $30 billion by Disney for the buy-out. While $30 billion wouldn’t break Disney it would have been the end of Bob Iger (damn it).  

However, the independent assessors have agreed that Disney has done such a shitty job with Hulu that today it’s only worth around $30 billion total today and there Disney only has to cough $10 billion. Pretty damn pricey but not the extinction-level event that ponying up a third of $90 billion would have been. 

So, what is Steamboat Wendigo planning to do with Hulu? 

Ruin it of course. Damn, what were you expecting? 

A sensible plan would be to roll the failed Disney+ into Hulu. Just combine the two and make Disney+ another tab at the top of Hulu because Hulu is doing just fine, it’s actually healthy and pulling it’s own weight. And back in May that appeared to be the plan. 

However, the plan today is to shut down Hulu and roll it into Disney+. No, I’m not joking about that. 

I almost didn’t run with this but WDWPro is running with it and given his track record, this is almost certainly what’s going on. 

Darklings: Disney does stupid things pretty instinctively but what the hell dude? 

The Dark Herald: I know, right? 

However, for once the bad idea may be unavoidable. Here’s the thing, Disney is the in middle of a lawsuit… 

Darklings: Which one? 

The Dark Herald: Sorry, the one with Comcast. 

Comcast sued as shareholders in Hulu, because they felt Disney did nothing to expand Hulu overseas. And they are absolutely right, Disney didn’t lift a finger to do that. Disney was concentrating on their own Star network overseas. 

The suit is now in arbitration. Disney’s position is strengthened if they can claim, “We were never going to use Hulu anyway.” And in terms of the international market, they never were because they needed to claim those subscriber numbers as exclusively belonging to Disney. The reason they needed to do that was because Wall Street was being utterly retarded about streaming subscription numbers and not actual profits.  

Wall Street has gotten over that. Disney’s stock price dropped below $80 for the first time today. It will hang around at that price for a while because 80 is a multiple of five and a lot of investors set their buy and sell prices on those. 

But at this point, there is no reason for Disney’s stock to go up. 

Discuss on Social Galactic 

Share this post