Disney Headlines for November 7th, 2023
Disney Cruise Line wins big, while Disney and Comcast settle for détente.
Let’s talk about the biggest Disney Headlines for the week and maybe speculate a bit about what comes next.
The Best Family Cruise Line
Photo: Disney
Some Headlines are recurring, as they tend to rise again every few months.
Here’s an example. CNBC ran a Headline on Sunday, November 5th, that reinforced what we already know.
Credit: Disney
Disney Cruise Line “is the No. 1 cruise line for families.”
Once again, travelers have voted early and often in favor of Disney Cruise Line (DCL) as the family experience at sea.
Photo: Disney
This article cites a State of the Cruise Industry report that cruises have evolved into one of the fast-growing sectors in the tourism industry.
I suspect this fact signifies one of the lingering remnants of so-called Revenge Travel.
Photo: Disney
While theme parks have largely met the pent-up demand that the pandemic caused, cruises haven’t yet.
If anything, two years without cruises caused guests to appreciate this activity more fully.
Now, people are booking cruises years in advance as a way of scheduling some later joy.
Disney tops the list of cruise options for families. The article cites a recent ranking that speaks highly of DCL cruise ships.
According to this report, Disney ships “receive kudos from families and critics alike for their family-friendly atmospheres, whimsical amenities and well-equipped staterooms.”
The ranking system also lauds Disney for its cast member ratio. According to their report:
Photo: Disney
“Although Disney’s ships vary in size, each vessel carries approximately one crew member for every three passengers.”
That’s an extremely impressive fact because it assures you’ll receive personal service during any DCL vacation.
credit: Disney Cruise Line
Again, this Headline arises seemingly every time someone ranks family cruise lines, but when CNBC reports something like this, it’s a bigger story.
Disney Writes a Big Check
On November 1st, the first day possible for the transaction, The Walt Disney Company and Comcast agreed to a deal.
Disney will pay Comcast a minimum of $8.61 billion to acquire the remaining one-third ownership interest in Hulu.
Photo: skillastics.com
I’ve written an entire article about the matter, but I also want to discuss it in Headlines because, well, it’s THE Disney Headline at the moment.
That fact will change when Disney reports its fiscal earnings tomorrow, but Hollywood and Wall Street alike are curious about Disney’s streaming plans.
Photo: Disney
Disney immediately provided one hint on Sunday with its new ad campaign, which informs Hulu subscribers that they can add Disney+ for only $2 more.
That’s one of the reasons why Disney CEO Bob Iger coveted Hulu. He envisioned a single-app solution down the line.
Image: The Wall Street Journal
Disney previously suggested that Disney+ will add a Hulu tile later this year.
Well, we’re in November, and we can’t get much later than that. So, I fully expect an announcement soon.
Photo: THIERRY CHESNOT/GETTY IMAGES
Presumably, Disney didn’t want to say anything until it acquired the ownership stake that Comcast had held.
The deal between the two parties is noteworthy because they haven’t always gotten along.
Photo: Wikipedia
Comcast famously drove up the price of the Fox assets. Disney initially agreed to pay $52.4 billion in that acquisition.
According to Reuters, Comcast tried to “gate-crash” that transaction before ceding to Disney’s $71.3 billion offer.
Photo: Natacha Rafalski on Instagram
As revenge, Iger entered a bidding work for England’s Sky. Ultimately, Comcast won after an unusual auction wherein Disney and Rupert Murdoch bid together.
That union will never happen again, but it reinforces the level of animosity between Disney and Comcast five years ago.
Filmmaker magazine
Since then, cooler heads have prevailed. Now, the same entities, Iger and Comcast’s Brian Roberts, can agree to a deal that helps both ball clubs.
Disney’s Streaming Ambitions Revealed
The odd transaction doesn’t include an exact price yet. Instead, Disney and Comcast have hired their own financial services.
These unaffiliated parties will evaluate Hulu and settle on fair-market values.
Photo: Hulu
If the numbers are close, they’ll split the difference. Otherwise, a third unaffiliated party will work as the final arbiter.
That group will decide on a price. So, if these parties believe that Hulu is worth $27.5 billion or less, this transaction has already been completed.
Photo: Getty
Should arbitration choose a higher price, Disney would owe one-third of the difference to pay off Hulu’s stake.
For instance, let’s say that arbitration determines that Hulu is worth $33.5 billion. Disney would be on the hook for $2 billion more.
Photo:Disneycoupon.jpg
Basically, Disney just bought the remainder of Hulu on an installment plan.
Since Comcast wanted the money quickly, both parties shared a mutual interest in cash changing hands now.
Photo: vecteezy.com
Disney will probably owe more later, which brings us to the next part of this conversation.
According to Reuters, ESPN’s current value is $24 billion. Technically, that evaluation comes from a Bank of America research note, but that’s beside the point.
Photo:GETTY IMAGES FOR ESPN
In the story, Reuters suggests that Disney could feasibly sell partial or full ownership of ESPN to “tech firms,” “telecom majors,” or “sports leagues.”
Those are the three entities Bob Iger has tried to entice into investing in ESPN.
(Charley Gallay / Getty Images for Disney)
More importantly, the research note suggests that Disney could sell a 36 percent stake in ESPN.
The New ESPN
Photo: Deadline
Effectively, Disney would create an ESPN 2.0 that’s over-the-top, which is to say, a streaming service first and foremost.
By attracting a telecom like Verizon or T-Mobile, Disney could ensure that it maintains a large viewer base, which is critical for marketing to live sports viewers.
Photo: apple
Similarly, if Disney gains a partnership with a trillion-dollar company like Apple or Amazon, it would be less vulnerable to sports rights negotiations.
For example, Disney had bid on NFL Sunday Ticket, but Google paid substantially more to pin down those streaming rights.
Photo: Recorder.com
That aspect explains why Disney would like major professional sports leagues like the National Football League and National Basketball Association to join.
If these entities became part owners of ESPN, they’d have a vested interest in keeping their broadcasting rights on the service.
Photo: x @starindia
What Iger wants and what Disney gets aren’t necessarily the same. However, the Hulu transaction signifies the next domino to fall.
Everyone expects a partial/full sale of Star India to happen next. After that, Disney may sell its Linear Networks.
Photo:Indian Express
Since Disney has now paid for its biggest lingering expense, the Comcast portion of Hulu, any additional capital is multidirectional.
Iger could return to what he loves best. He could buy something else to solidify his planned Disney streaming empire.
Photo: skillastics.com
As I type this, Warner Bros. Discovery holds a sub-$30 billion market cap, while Paramount is under $10 billion, and Take-Two Interactive hovers under $25 billion.
With enough capital, Iger could target one of these assets. That’s how the Hulu Headline of today could create future Headlines.
Photo: PepsiCo
Also, Disney brought in a CFO with plentiful experience involving similar transactions in Hugh Johnston.
He handled several transactions at PepsiCo, most recently Pioneer Foods in 2020.
Notably, that transaction occurred in an international market. So, it’s akin to a Star India transaction that international laws applied.
Photo: Disney
Disney’s new CFO has proven deft in handling such deals.
Folks, Bob Iger checked off some important boxes this week.
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