News Disney and Fox come to terms -- announcement soon; huge IP acquisition

[AnotherDayAnotherDollar]

Just for Grin's, lets agree that Disney and it's 60% will drive the expansion strategy. Currently Disney = 60%, Comcast = 30% and AT&T = 10%. Using the numbers above, that put's Disney's Equity value at 3 Billion, Comcast at 1.5 Billion, and AT&T at .5 Billion. Again for Grins, lets say Disney wants to spend 3.5 Billion on Expansion. That will increase the yearly loss to $5 billion. My question is would Comcast and AT&T Cover that $5.0 Billion or just stay pat?

Again, for Grins, lets say they don't participate. Using a little math, Disney's equity would rise to 84.6%, Comcast would Fall to 11.5% and AT&T to 3.8%. I know Comcast has said they want to "Play the Long Game" with Hulu, but the cost of playing along makes it harder for Comcast to reduce its Post Sky Acquisition debt level, (Same with AT&T and Time Warner). In game theory there are signal's sent, and the comment above is what I would say too..... Not sure it is what I would do if I were Comcast, as the money I put up for my major competitor to spend, will make that competitor stronger, not weaker.... as for the data on the 25 million subscribers, I would argue Comcast already has access to that data, and the benefit of "Playing the Long Game" is not greater than the cost to stay in the game.....

For me, I am folding and going to a different card table.....

Are you sure that's how Hulu's equity works? That opens the possibility of equity being changed every year. So let's say your scenario plays out. Then the next 2 years the same thing happens and now Disney owns 99% of the entity. And then Hulu is profitable and Comcast and ATT want higher stakes so they each put in 10x as much as Disney, so now Disney ownership goes down to 50%? This is a little confusing to me.

 

[Rodan75]

Just for Grin's, lets agree that Disney and it's 60% will drive the expansion strategy. Currently Disney = 60%, Comcast = 30% and AT&T = 10%. Using the numbers above, that put's Disney's Equity value at 3 Billion, Comcast at 1.5 Billion, and AT&T at .5 Billion. Again for Grins, lets say Disney wants to spend 3.5 Billion on Expansion. That will increase the yearly loss to $5 billion. My question is would Comcast and AT&T Cover that $5.0 Billion or just stay pat?

Again, for Grins, lets say they don't participate. Using a little math, Disney's equity would rise to 84.6%, Comcast would Fall to 11.5% and AT&T to 3.8%. I know Comcast has said they want to "Play the Long Game" with Hulu, but the cost of playing along makes it harder for Comcast to reduce its Post Sky Acquisition debt level, (Same with AT&T and Time Warner). In game theory there are signal's sent, and the comment above is what I would say too..... Not sure it is what I would do if I were Comcast, as the money I put up for my major competitor to spend, will make that competitor stronger, not weaker.... as for the data on the 25 million subscribers, I would argue Comcast already has access to that data, and the benefit of "Playing the Long Game" is not greater than the cost to stay in the game.....

For me, I am folding and going to a different card table.....

So I don't think it would work this way. AT&T gets less say since they aren't a charter member of the Hulu board, but Comcast is. So they could veto the expansion and enable the Comcast product the ability to expand internationally first. My thought process is either Comcast agrees to sell, goes back to being a non-voting member of the board or Hulu dies, or everyone agrees to sell it to a 3rd party.

I don't believe that Disney buys the AT&T stake unless they can get Comcast to budge. And I don't think anyone should believe Comcast when they say they plan to keep their Hulu stake, clearly that will not be possible over the long term.

 

[Rodan75]

Steve Burke stated later it will also be provided to Charter and DirectTV consumers and those outside the pay-tv network will those that would pay a fee to use.

Again if all cable users get it for free...it’s not gonna make money. It’s a retention tool.

And as stated and iterated by Comcast leadership

Burke's statements yesterday, seem to indicate they are very early into their thoughts on this Service. I agree it is partially a retention tool, but offers the flexibility to sell to other users which does put it into direct competition with Hulu. (Early in the day it was that all NBC Subscribers would get the service for Free, which would be all Cable and Sat Subs, instead of Xfinity or SKY Subs)

No way that Comcast can maintain their charter voting rights with Hulu and manage a competitor.

 

[Rodan75]

It looks like there may be a RSNs spinoff like I wanted. According to the NY Post the Feds may agree to it. https://www.google.com/amp/s/nypost...pin-off-of-foxs-regional-sports-networks/amp/

I agree with the thought process, but I think the NYP described the biggest issue with the concept, they lose the clout they had with Fox to enforce carriage. It is a big asset to let waste away, which is what I think would happen in a spin-off.

 

[AnotherDayAnotherDollar]

So I don't think it would work this way. AT&T gets less say since they aren't a charter member of the Hulu board, but Comcast is. So they could veto the expansion and enable the Comcast product the ability to expand internationally first. My thought process is either Comcast agrees to sell, goes back to being a non-voting member of the board or Hulu dies, or everyone agrees to sell it to a 3rd party.

I don't believe that Disney buys the AT&T stake unless they can get Comcast to budge. And I don't think anyone should believe Comcast when they say they plan to keep their Hulu stake, clearly that will not be possible over the long term.

https://variety.com/2019/tv/news/nbcuniversal-streaming-service-steve-burke-1203107638/

Among the many questions raised by NBCU’s OTT plans is the fate of Comcast’s 30% interest in Hulu. NBCU’s service in many ways will duplicate Hulu’s offering. Hulu’s ownership picture is already changing with Disney’s pending acquisition of 21st Century Fox — a mammoth deal driven by Disney’s desire to build a global streaming platform to compete with Netflix. Disney is expected to try to buy out Comcast’s Hulu stake, but Burke indicated that Comcast was in no rush to sell.

“Fifty years from now will we be in Hulu? No, I don’t think we will. But I don’t think we’ll sell in five minutes,” Burke said. “Disney would like to buy us out. I don’t think anything’s going to happen in the near term. (NBCU’s service) will be one of many and it’s going to be as competitive with Netflix and Amazon and Hulu as anyone else.”

They (like AT&T) are definitely open to selling, but they know Disney wants to buy. It's a matter of sitting down and coming up with a fair market value. That is the challenge and the question (if they can sit down and do it). Furthermore, I think Disney would want those Marvel rights bundled in from Comcast as well. A deal may never be reached, but hearing from execs from DIS, CMCSA, and T one can see all 3 parties are willing to deal with the former buying the latter 2 from the venture. Whether or not it'll happen remains to be seen. The only thing bigger than these execs bank accounts is their egos.

For these companies short term and long term is very subjective. On the newer Disney movies on Netflix Iger said that "they have a window of exclusivity that expires and then they have access to that content non exclusively for quite a long time after that" or something of that nature. We now know the content gets removed from Netflix 18 months after they were released there. The non exclusive period is likely to be 6-9 months (with a 9-12 months exclusive period).

On CMCSA's DTC app, it's both a retention tool and a for profit service. They'll sell it to non Comcast consumers and I doubt they will be giving that away to show how awesome Xfinity is.

 

[AnotherDayAnotherDollar]

Disney looking to reach deal to sell the 22 RSNs by end of February. They can only sell those after the deal closes (they have 90 days from the time the deal closes to sell them).

 

[bartholomr4]

So I don't think it would work this way. AT&T gets less say since they aren't a charter member of the Hulu board, but Comcast is. So they could veto the expansion and enable the Comcast product the ability to expand internationally first. My thought process is either Comcast agrees to sell, goes back to being a non-voting member of the board or Hulu dies, or everyone agrees to sell it to a 3rd party.

I don't believe that Disney buys the AT&T stake unless they can get Comcast to budge. And I don't think anyone should believe Comcast when they say they plan to keep their Hulu stake, clearly that will not be possible over the long term.

Just to add some of my research to my “for Grins” scenario..... These are the Hulu board members currently and who they represent...NBCU: Jeff Shell, Linda Yaccarino and Matt Bond. Disney's directors are Kevin Mayer, Ben Sherwood and Bruce Rosenblum, while Fox's board members are Peter Rice, Dana Walden and Brian Sullivan. Hulu CEO Randy Freer also serves on the board (Former executive at Fox). Matt Bond, is leaving the board in May, but will be replaced by NBCU.

The original charter members/Owners of Hulu, were NBCU, Facebook, MSN, Yahoo, Providence Equity Partners. and Myspace (formed in 2007). Disney and Fox didn’t get their current ownership positions until 2011, with everyone but NBCU selling out in the interim. Disney, Fox and NBCU kept Hulu (based on the press articles of the time)going so they wouldn’t loose the revenue stream associated with having their libraries on the service. Time Warner purchased their 10% in 2015.

While the board rules aren’t public, it is reasonable to believe (my opinion) the board rules are likely those similar to publicly traded companies which allow any board member to bring an item to the board, and if someone seconds the motion, a vote will be required. The Chairman then allows for anyone who wants to discuss an item to do so, and then holds a vote, with the majority decision being documented as the boards decision. Maybe there are rules which allow NBCU/Comcast to veto any motion, but with Disney’s 6 votes to AT&T and Comcast 4, (plus Freer’s vote), I am thinking Disney can have their way..... Just food for thought

 

[Lafayettecalboy]

CADE Brazil Expected to Clear Fox/Disney with Behavioral Remedies January 30.

 

[brodie999]

CADE Brazil Expected to Clear Fox/Disney with Behavioral Remedies January 30.

Sweet!! With Brazil approving the deal by the end of the month, that leaves Mexico the only country left to approve the deal! Which makes it more likely that Disney will finalise their acquisition of Fox next month.

 

[bartholomr4]

Comcast Sky Strategy A Mystery As Analysts Eye Content, Streaming
https://www.investors.com/news/technology/comcast-stock-sky-streaming-content-strategy/

Sky To Lose Content Partners Under Comcast?

While Sky teamed with AT&T's HBO to produce a miniseries called "Chernobyl," it may be viewed differently by content partners now that it's owned by Comcast. AT&T acquired media giant Time Warner in June 2018. "There is simply too much risk that the proprietary affiliate agreements on which Sky depends — Premier League, Disney, Fox, (AT&T's) HBO, Showtime, to name a few — will be lost over the next few renewal cycles, leaving Sky as nothing more than a satellite TV operator with me-too content," said Moffett. "We continue to believe that Comcast will have to massively ramp spending on originals to protect Sky's franchise when their exclusive affiliate deals go away."

 

[MisterPenguin]

Comcast Sky Strategy A Mystery As Analysts Eye Content, Streaming
https://www.investors.com/news/technology/comcast-stock-sky-streaming-content-strategy/

Sky To Lose Content Partners Under Comcast?

While Sky teamed with AT&T's HBO to produce a miniseries called "Chernobyl," it may be viewed differently by content partners now that it's owned by Comcast. AT&T acquired media giant Time Warner in June 2018. "There is simply too much risk that the proprietary affiliate agreements on which Sky depends — Premier League, Disney, Fox, (AT&T's) HBO, Showtime, to name a few — will be lost over the next few renewal cycles, leaving Sky as nothing more than a satellite TV operator with me-too content," said Moffett. "We continue to believe that Comcast will have to massively ramp spending on originals to protect Sky's franchise when their exclusive affiliate deals go away."

Good luck with that, Comcast, you got about ten media/tech giants with the jump on you.

 

[Indy_UK]

Comcast Sky Strategy A Mystery As Analysts Eye Content, Streaming
https://www.investors.com/news/technology/comcast-stock-sky-streaming-content-strategy/

Sky To Lose Content Partners Under Comcast?

While Sky teamed with AT&T's HBO to produce a miniseries called "Chernobyl," it may be viewed differently by content partners now that it's owned by Comcast. AT&T acquired media giant Time Warner in June 2018. "There is simply too much risk that the proprietary affiliate agreements on which Sky depends — Premier League, Disney, Fox, (AT&T's) HBO, Showtime, to name a few — will be lost over the next few renewal cycles, leaving Sky as nothing more than a satellite TV operator with me-too content," said Moffett. "We continue to believe that Comcast will have to massively ramp spending on originals to protect Sky's franchise when their exclusive affiliate deals go away."

I dont think it will happen immediately but loosing all the Disney/ Fox channels and content one day would be a huge loss for Comcast. Personally I hope Disney do take the content away and make the loss back through Disney Plus and free to air TV and advertisers

 

[Rodan75]

Good luck with that, Comcast, you got about ten media/tech giants with the jump on you.

Honestly I don't begrudge them for trying streaming, it is still early in this transition to OTT. BUT, Comcast's approach, similar to AT&T's approach seems so convoluted.

Disney has a lot going on as well, but maybe they've done a little better job fleshing out their strategy publically; Disney+ (All Ages), Hulu (Live TV + OTT Older demo), ESPN+ (SPORTS!). I'm assuming that Hulu will become an OTT aggregator as well. They do this a little bit with with HBO and STARZ, similar to what Amazon does with their Channels service.

I think both AT&T and Comcast have missed opportunities to better define their service offerings and that makes them feel like failures already.

 

[Stripes]

Comcast Sky Strategy A Mystery As Analysts Eye Content, Streaming
https://www.investors.com/news/technology/comcast-stock-sky-streaming-content-strategy/

Sky To Lose Content Partners Under Comcast?

While Sky teamed with AT&T's HBO to produce a miniseries called "Chernobyl," it may be viewed differently by content partners now that it's owned by Comcast. AT&T acquired media giant Time Warner in June 2018. "There is simply too much risk that the proprietary affiliate agreements on which Sky depends — Premier League, Disney, Fox, (AT&T's) HBO, Showtime, to name a few — will be lost over the next few renewal cycles, leaving Sky as nothing more than a satellite TV operator with me-too content," said Moffett. "We continue to believe that Comcast will have to massively ramp spending on originals to protect Sky's franchise when their exclusive affiliate deals go away."

What anybody ever saw in Sky is beyond me. Losing Sky was just as much of a win for Disney as nabbing Fox. Comcast will be kicking themselves down the road.

 

[seascape]

What anybody ever saw in Sky is beyond me. Losing Sky was just as much of a win for Disney as nabbing Fox. Comcast will be kicking themselves down the road.

Sky was needed for Comcast to expand abroad. However, the assests Fox has in India and the rest of the world gives Disney the better assests. All anyone has to do is look at Mexico and Brazil.

 

[Indy_UK]

What anybody ever saw in Sky is beyond me. Losing Sky was just as much of a win for Disney as nabbing Fox. Comcast will be kicking themselves down the road.

Totally agree but for some reason Disney must have seen some value in wanting them too.

 

[JoeCamel]

Totally agree but for some reason Disney must have seen some value in wanting them too.

Careful, in this thread that is like saying "Jack Sparrow is not a real pirate".

 

[Stripes]

Totally agree but for some reason Disney must have seen some value in wanting them too.

And I've no idea why. Sky doesn't provide a very compelling product in my view. From what I understand of the UK TV market, a lot of content is already provided through "Freeview", and a far smaller percentage of British and European families subscribe to cable compared to the American market. Without heavy, heavy investment in the product, I don't see that changing anytime soon. And the prevalence of free content means there's substantial market pressure to keep the price low, meaning they can't gouge customers with higher prices to generate revenue growth.

Careful, in this thread that is like saying "Jack Sparrow is not a real pirate".

It's Captain. Captain Jack Sparrow

 

[seascape]

Totally agree but for some reason Disney must have seen some value in wanting them too.

I think Disney saw some cross promotional and advertising for Disney Paris along with media for the rest of the company. They clearly did not put anywhere near the value on it as Comcast did since they barely bid more than Comcasts original bid in round one and for the final round they just again barely bid morr than Comcasts bid resulting in the extremely high price Comcast paid. Disney then agreed to sell the Fox shares to Comcast.

Now the next advantage Disney stockholders get is the justice Department approved Disney's ability to spin off the Fox RSNs if they dont get a good price. That will increase the chance to get close to the $20 million the want or just spin them off to the stockholders.

 

[Quinnmac000]

Comcast Sky Strategy A Mystery As Analysts Eye Content, Streaming
https://www.investors.com/news/technology/comcast-stock-sky-streaming-content-strategy/

Sky To Lose Content Partners Under Comcast?

While Sky teamed with AT&T's HBO to produce a miniseries called "Chernobyl," it may be viewed differently by content partners now that it's owned by Comcast. AT&T acquired media giant Time Warner in June 2018. "There is simply too much risk that the proprietary affiliate agreements on which Sky depends — Premier League, Disney, Fox, (AT&T's) HBO, Showtime, to name a few — will be lost over the next few renewal cycles, leaving Sky as nothing more than a satellite TV operator with me-too content," said Moffett. "We continue to believe that Comcast will have to massively ramp spending on originals to protect Sky's franchise when their exclusive affiliate deals go away."

Universal/Sky are so intertwined with UK entertainment, I don't think it will be a huge limiting factor except they will have to accelerate content production to make up for losses in Kid?family area and high budget television.

NBCU International (Downtown Abbey, Jamestown, etc) and Sky Vision (Das Boot, The Great British Bake off and all the spin-offs, Sick Note) are content creators by themselves. A lot of what they were doing in particular with Showtime and HBO were co-productions with those outside agencies as well as provide content.

While Sky may lose Disney, they still have their co-ownership in Viacom's/Paramount's family/kid operations in Europe as well as NBCU access to their award winning Dreamworks television apparatus. Additionally, it is thought Illumination Entertainment will also get into the kids television business as well.

Showtime/Sky only co-produced one successful show together which was the first three seasons of Penny Dreadful. They don't seem to want to invest in the reboot of the series.

As for HBO/Sky, Even after the AT&T merger, WB and UT have co-produced television shows together to include the current running Manifest on NBC. I don't think Sky/HBO deal will be affected as it also helps lower production costs on the AT&T side by having someone else in the mix.

Sports may be an issue but based on other reporting, NBCU seems to be willing to allow a open check book to get whatever rights nessacary as they want to carry live sports on their new ad-supported service.
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Abroad,

This is going to be the major difference between Disney's streaming service and Universal....Universal streaming service will already be free to Sky subscribers so its a net gain for them to get even more content than they do now even with the loss of certain deals. Disney is taking everything off everywhere else breaking it into three services. Sky's investment in non-English originals and productions will bode them extremely well quite a few markets