After many delays and false starts, it seems as though the big media companies are finally prepared to offer Netflix some real competition. Disney now owns 60% of Hulu, and could soon own more. Hulu has purchased AT&T’s 9.5% share (acquired when the telecom purchased Time Warner). Now Disney and Comcast, the only two large remaining owners of Hulu will have to negotiate on how much of the purchase each receives. Disney is preparing to use Hulu as the counterpart to its family streaming offering, Disney+. Hulu will host shows with more adult themes. Meanwhile, AT&T is preparing its own streaming offering. Drew FitzGerald reports at The Wall Street Journal:
AT&T’s WarnerMedia, as the film-and-TV unit is now called, is developing a new on-demand video service similar to Hulu’s to house new titles like “Aquaman” and popular reruns like “Friends.”
Executives haven’t disclosed the name of the product or how much it will cost, though plans call for a three-tiered service built around WarnerMedia’s HBO TV series with added content from its Warner Bros. studios and cable-TV brands. The untitled service is scheduled to launch at the end of this year.
Disney last week unveiled Disney+, another subscription service to hold content from the “Star Wars” franchise, Marvel movies and classic animated films.
But the Mickey Mouse company plans to offer more mature programming through Hulu while centering its sports assets around ESPN+.
It is unclear how the new ownership will affect which shows Hulu will keep in its library.
WarnerMedia executives have said the company won’t make all its content exclusive and will license the rights opportunistically.
In a statement Monday, Hulu Chief Executive Randy Freer said “WarnerMedia will remain a valued partner to Hulu for years to come as we offer customers the best of TV, live and on demand, all in one place.”
Disney’s recent unveiling of details about its Disney+ service was celebrated by the market driving its stock price up over $130/share. At Barron’s Nicholas Jasinski explained Disney’s streaming plans, writing:
Facing pressure from cord-cutting and changing viewer preferences, Disney has begun to pivot to direct-to-consumer streaming, taking on the likes ofNetflix (NFLX) and Amazon.com ’s (AMZN) Prime Video. Disney+ is set to launch in the U.S. on Nov. 12 at a cost of $6.99 a month or $69.99 annually. It will include new and library titles from Disney, Pixar, Marvel, Star Wars, National Geographic, and some other Fox content like The Simpsons.
At last week’s investor day, Disney said it expects the service to boast 60 to 90 million subscribers world-wide by fiscal 2024, though the company also doesn’t expect the service to be profitable until that year.
Potentially 90 million Disney+ subscribers in just five years is well above what most Wall Street analysts had been modeling. With a price point about half of Netflix’s and with a big library of well-known and loved franchises, it’s clearly a competitive offering for consumers and many investors seem optimistic that Disney will reach its streaming goals. Those factors caused Disney stock to rally on Friday.
Read more here.
Jeremy Jones, CFA
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