Disney Headlines for February 2nd, 2023
This past week, Disney union issues reared their ugly head again after a relatively quiet few years.
Also, Disney just signed a DVD agreement (?) and protected Hulu’s prospects.
We’ll talk about some oddities that feel like throwbacks to past years in the latest batch of Disney Headlines.
Disney Bought Most of Fox but Still Needs Fox
What will The Walt Disney Company do with one of its best media assets, Hulu?
That answer remains to be seen. No matter what Disney decides, it needs Hulu in the best possible shape.
Otherwise, Disney can’t sell the streaming service OR make money off it. This awkward position just caused Disney to cut a deal.
Remember in 2019 when Disney purchased most Fox media assets? At the time, Hulu hosted programming from every major network except CBS.
Since then, NBCUniversal has reverted its licensing rights to its own service, Peacock. So, Hulu programming lost a gigantic amount of content almost overnight.
Obviously, Hulu couldn’t afford to lose anything else. If it did, subscribers would cancel, leaving Disney with a worthless product.
Disney officials avoided this fate the other day by coming to an agreement with Fox.
Under the terms of the deal, Fox programming will remain on Hulu for multiple years, thereby ensuring Hulu’s value until the end of 2024.
Why is that date significant? Disney must decide whether to purchase NBCUniversal’s ownership interest in Hulu.
Currently, Disney owns two-thirds of Hulu, while NBCUniversal owns one-third. Disney will either pay NBCUniversal $10+ billion or sell its own interest.
In that scenario, NBCUniversal pays Disney at least $20 billion. Disney’s cut isn’t guaranteed in writing the way that NBCUniversal’s is, though.
So, Disney must keep up appearances no matter how its executives feel about Hulu privately.
Losing Fox’s network programming would have proven devastating to Disney.
Also, for reasons too arcane to discuss, Disney properties like The Simpsons and Family Guy couldn’t have aired on Hulu without this agreement.
TL:DR – Disney just committed a ton of money to guarantee Hulu at least maintains its current value and possibly even increases.
Also, you can still watch new Fox programming on Hulu.
Disney Goes Retro
Quick, when was the last time you purchased a DVC, Blu-Ray, or another form of physical media?
I’m not judging you or anything. I’m making a point. Most consumers have happily entered the streaming media era.
The beauty of Disney+ is that you don’t need to track down your copy of The Lion King before you can watch it. Instead, you just search on Disney+.
Well, not everyone subscribes to Disney+. Also, plenty of people aren’t ready to leave physical media in the past.
In fact, I know a guy who almost defiantly brags any time Netflix delivers a batch of DVDs. Yes, Netflix still operates a DVD-by-mail service.
The same people who subscribe to AOL, watch cable television, and buy the local newspaper prefer hard copies of their movies.
So, Disney must keep releasing its content library on physical media. Believe it or not, the company generated $820 million in revenue this way in fiscal 2022.
Those earnings reflect a drop of nearly 20 percent from fiscal 2021, but Disney still makes a LOT of money from physical media.
As you might imagine, the profit margin on DVDs and Blu-Rays is off the charts since it’s so cheap to manufacture at this point in the industry’s life cycle.
The flip side is that most physical media manufacturers have fallen by the wayside. It’s…not a growth industry.
That bums me out as I once worked at Blockbuster, and my first wife worked at the largest DVD manufacturer in the state for several years.
Still, Disney’s problem is keeping the trains running on time. It needs suppliers for its products.
That’s how this story became a Headline. Mill Creek Entertainment has agreed to manufacture hundreds of catalog titles on DVD and Blu-Ray.
I feel like I’m reporting this from 1999.
The Latest Labor Dispute
Raise your hand if you saw this one coming a mile away. You all have your hand raised, don’t you?
Yeah, the start of the pandemic led to a predictable outcome. Hyperinflation proved problematic due to supply chain and staffing issues.
Simultaneously, the price of housing soared in popular locations. Thanks to the magic of work-from-home employment, people could live wherever they wanted.
In a not-at-all surprising turn of events, workers flocked to Central Florida and the greater Los Angeles area, two places with Disney theme parks.
The sudden influx of new people created a supply/demand imbalance in the housing market.
Anecdotally, if I had purchased a condo we liked at Margaritaville Orlando, its value would have increased about $200,000 in two calendar years.
The price has since dropped as the housing market cooled, but that’s little consolation to Floridians living paycheck to paycheck.
Suddenly, people could no longer afford to live in their own homes due to rising rental prices. Sadly, Florida’s government has done nothing of note.
So, cast members are looking to Disney for bigger paychecks. For its part, Disney thought it had solved the labor crisis for a while.
In 2018, Walt Disney World and its unions negotiated for the body of a year before hammering out an agreement.
At the time, Disney promised a salary of $15 per hour by 2021 for all union members.
That sounded good – or at least acceptable – in 2018. Now, the math just doesn’t work. Ergo, labor unions plan to reject Disney’s latest offer.
While we’re still in the early stages of this negotiation, it could quickly turn south. So, we will probably need to discuss it again soon.
In the interim, you can catch up on the current status via this article by the always-impressive Chris Isidore at CNN.
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Feature Photo: Disney