Could A Sale Of Hulu Be Bob Iger’s Next Move?
Although Disney turned in a highly successful Q1 earnings call last week, CEO Bob Iger still has his work cut out for him.
While Disney was able to fight off Nelson Petlz’s bid for a proxy battle, the company still faces a large debt and an uncertain media landscape.
One of the biggest decisions that Iger will have to make in the upcoming months revolves around Disney’s stake in Hulu.
As Disney continues to face pressure due its is streaming losses, Iger has previously suggested that Disney could end up selling the streaming service, saying “everything was on the table”
Disney and Hulu
Disney currently owns two-thirds of the streaming service, with Comcast Universal controlling the rest.
Under the terms of their joint agreement however, Comcast could require Disney to buy out its stake in Hulu as early as January 2024. The minimum equity value that Disney would have to pay is $9.2 billion for the remaining 33% stake.
If Disney were to chose to sell their stake in Hulu however, Comcast could be a buyer.
What is unclear though is what a sale of Disney’s Hulu stake would include. Insiders have suggested that Disney could potentially include FX or maybe even the Fox movies in any transaction.
Is Hulu Worth It?
Hulu currently boasts 48 million subscribers and features top-rated shows including “Only Murders in the Building” and “The Handmaids Tale”.
When Disney originally reached an agreement to buy a stake in Hulu, Iger sated that the purchase would allow Disney the ability to offer a more mature viewing experience to customers and provide flexibility with bundling.
Since that time however, the economics of streaming have changed significantly, as investors now focus on profitability not subscriber count.
Disney’s direct-to-consumer division reported a $1.1 billion loss in fiscal first quarter, which was a marked improvement over the $1.5 billion loss in Q4.
A Mountain of Debt
Still, Iger knows that the company’s debt load is a problem he has to tackle head on.
Last week, the Disney CEO laid out his plan to restructure the company into three main divisions– Disney Entertainment, ESPN, and Disney Parks, Experiences and Products. In conjunction with this restructuring, Disney announced its plan to lay of 7,000 workers.
“I am committed to positioning this company for a new era of growth,” Iger said in a press release on Thursday.
“Our strategic restructuring will return creativity to the center of the company, increase accountability, improve results, and ensure the quality of our content and experiences.”
One way to unload some of the company’s debt, and perhaps improve its focus on the profitability of Disney + would be a sale of Hulu. Whether or not Iger will think that the rewards outweighs the costs remains to be seen. Nevertheless, it appears as if everything is on the table.
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