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

[bartholomr4]

Surely the only reason why Comcast wouldnt sell their 30% is becuase they don't have much faith in their streaming services doing well?

My theory (for what it is worth) assumes the cost of international expansion around $5 Billion, which Disney has from the sale of Sky and the RSN's. Based on the ownership agreement (again I am assuming the agreement works this way), each of the owners has to make up (at the end of each quarter) any loss which Hulu has, based on the percentage of ownership. The money they put in comes back to the owners in the form of additional stock in the company.....Right now, Disney has to make up 60% of that loss, AT&T 10% and Comcast 30%.

Under this scenario, Disney would have to fund $3 Billion of the cost of the expansion, AT&T $500 Million and Comcast $1.5 Billion.... My theory (again) is Comcast and AT&T heavily in debt, don't want to pony up that cost. At the end of the day, they know Disney is going to reap the greatest benefit, snd they resist or refuse to put in more capital....

Disney instead (using its 60% control) votes to expand anyway and makes up the difference and takes additional stock (equity) in Hulu as a result, thus "watering down" the equity of AT&T and Comcast. If this scenario would play out, (my estimate) now ends up with about 74.2% of the Equity, Comcast at 19.2% and AT&T down to 6.6% (rounding here)......

The value of Comcast and AT&T stock is the same (unless the expansion takes off and the net value of the overall company goes up), but Disney ends up owning more of HULU.... With control of the company at 60% (and AT&T wanting to sell their 10%), Disney could end up with 80% and slowly but surely push Comcast to the point where it would have to sell (Somewhere around the 90% mark).....

Just a theory, and can't be sure because the Hulu partnership agreement terms aren't public, but the control aspect Disney has, and its available cash can make Comcast and AT&T 1) have to write some big checks, or 2) water down their equity by forcing the expansion decision.....

 

[Quinnmac000]

My theory (for what it is worth) assumes the cost of international expansion around $5 Billion, which Disney has from the sale of Sky and the RSN's. Based on the ownership agreement (again I am assuming the agreement works this way), each of the owners has to make up (at the end of each quarter) any loss which Hulu has, based on the percentage of ownership. The money they put in comes back to the owners in the form of additional stock in the company.....Right now, Disney has to make up 60% of that loss, AT&T 10% and Comcast 30%.

Under this scenario, Disney would have to fund $3 Billion of the cost of the expansion, AT&T $500 Million and Comcast $1.5 Billion.... My theory (again) is Comcast and AT&T heavily in debt, don't want to pony up that cost. At the end of the day, they know Disney is going to reap the greatest benefit, snd they resist or refuse to put in more capital....

Disney instead (using its 60% control) votes to expand anyway and makes up the difference and takes additional stock (equity) in Hulu as a result, thus "watering down" the equity of AT&T and Comcast. If this scenario would play out, (my estimate) now ends up with about 74.2% of the Equity, Comcast at 19.2% and AT&T down to 6.6% (rounding here)......

The value of Comcast and AT&T stock is the same (unless the expansion takes off and the net value of the overall company goes up), but Disney ends up owning more of HULU.... With control of the company at 60% (and AT&T wanting to sell their 10%), Disney could end up with 80% and slowly but surely push Comcast to the point where it would have to sell (Somewhere around the 90% mark).....

Just a theory, and can't be sure because the Hulu partnership agreement terms aren't public, but the control aspect Disney has, and its available cash can make Comcast and AT&T 1) have to write some big checks, or 2) water down their equity by forcing the expansion decision.....

That's not a good assumption as they have seen been seen trying to acquire more companies over the past few months. If Comcast was actually worried about buying down their debt, they wouldn't be looking into acquiring Nexon Gaming Company or anything else.

Brian Roberts is bullish when it comes to things and willing to go into debt before them if he thinks it will bring the company wealth even if the stockholders don't think so. Which is in part why when Hulu goes international, they probably will put in the money for it.

 

[bartholomr4]

That's not a good assumption as they have seen been seen trying to acquire more companies over the past few months. If Comcast was actually worried about buying down their debt, they wouldn't be looking into acquiring Nexon Gaming Company or anything else.

Brian Roberts is bullish when it comes to things and willing to go into debt before them if he thinks it will bring the company wealth even if the stockholders don't think so. Which is in part why when Hulu goes international, they probably will put in the money for it.

Of course that is possible..... We will see.... the other side of the coin then is Comcast is now funding Hulu expansion internationally at a benefit of Disney.... Will be interesting to see how it develops.... Something I definitely look at the end of each quarter....

 

[Indy_UK]

Disney has a lot to gain internationally. With Hulu being limited to the US although with a heathy 23 million subscribers I believe its that what is holding the service back and the reason it's still making losses.

Comcast has bought SKY who are constantly putting prices up and driving people away to cord cut in the UK so what they've really purchased is already on the decline.

Where I do think Disney may struggle is how they market their services. Disney+ on its own I think will do really well and get the numbers they are looking for.

It's Hulu where I dont know will have the pull for people to add another subscription. Netflix is big in the U.K. but other services not so much. The Fox content is likely to be the key to this I think.

Again, I'm talking from a UK perspective but SKYs movie deal with Disney ends in 2020. With the Fox acquisition, those channels and content will sure to be up for discussion soon too.

Disney could be very brave and strip all their content from SKY. It would be like amputating a leg from SKY because of the amount of content from Disney/Fox they rely on. That's what I want them to do but I can see Comcast throwing enough money to keep the stuff on the platform. SKY paid £1 billion a couple of years ago just to keep the Discovery channels on the platform.

If Disney are brave enough though and making all that content exclusive to the 2 streaming services, it would be a massive payoff in getting the needed subscribers.

I hope long term that Disney also persue to get the ESPN rights in the U.K. Away from BT and then maybe launch ESPN+ here too

 

[Ripken10]

That's what I want them to do but I can see Comcast throwing enough money to keep the stuff on the platform. SKY paid £1 billion a couple of years ago just to keep the Discovery channels on the platform.

IF Comcast were to "throw money to keep it" that would also benefit Disney as that means Comcast would overpay for the content, in essence giving Disney revenue stream without the work (possibly being a source of funding for their streaming original content). That of course makes a key assumption. I am sure Disney has a number in mind that they believe it is worth.

 

[MisterPenguin]

IF Comcast were to "throw money to keep it" that would also benefit Disney as that means Comcast would overpay for the content, in essence giving Disney revenue stream without the work (possibly being a source of funding for their streaming original content). That of course makes a key assumption. I am sure Disney has a number in mind that they believe it is worth.

And if Comcast stubbornly stays in the Hulu game, then they got to contractually provide their NBC content to the service making Hulu a better streaming service which mainly benefits Disney.

 

[Darkprime]

Maybe Disney works out a deal with Comcast where Comcast guarantees it doesn't throttle their streaming service on their network.

 

[Indy_UK]

Either way it is a 'win' for Disney but they could go full on and descimate quite a bit of competition over here with stripping their content from virgin media, SKY and NowTV which is also owned by SKY.

Not sure if Disney could get in trouble when it comes to competition though

 

[seascape]

Maybe Disney works out a deal with Comcast where Comcast guarantees it doesn't throttle their streaming service on their network.

Comcast has to worry about streaming competition. With 5G service coming soon, cable companies are about to face 3 real competitors, Verizon, AT&T and Sprint/TMobile. Disney is perfectly situated with Hulu, Disney+, ESPN+ and Hulu live TV. For people with more than one home this package is ideal. Take your 5G service with a Cellular Provider between your homes and watch the TV you want all at a lower price than you pay for one triple play package and cellular service. If your like me and pay for 2 triple play packages you will save even more.

 

[Twilight_Roxas]

Maybe Disney works out a deal with Comcast where Comcast guarantees it doesn't throttle their streaming service on their network.

Wouldn’t that deal include Disney full rights to create Hulk films with characters in the Hulk comics?

 

[bartholomr4]

Comcast has to worry about streaming competition. With 5G service coming soon, cable companies are about to face 3 real competitors, Verizon, AT&T and Sprint/TMobile. Disney is perfectly situated with Hulu, Disney+, ESPN+ and Hulu live TV. For people with more than one home this package is ideal. Take your 5G service with a Cellular Provider between your homes and watch the TV you want all at a lower price than you pay for one triple play package and cellular service. If your like me and pay for 2 triple play packages you will save even more.

Hulu puts a cap on ad loads

Hulu has removed more than half of commercial time from ad breaks.

adage.com

Hulu forces NBCU, Fox CBS and Turner to reduce the length of commercial breaks to a maximum of 90 seconds. Most had been using 240 to 180 seconds on the service.... Cuts the number of ads in half (plus associated revenue for the networks) Article above.....

One way to tighten the rope.......

 

[Quinnmac000]

Hulu puts a cap on ad loads

Hulu has removed more than half of commercial time from ad breaks.

adage.com

Hulu forces NBCU, Fox CBS and Turner to reduce the length of commercial breaks to a maximum of 90 seconds. Most had been using 240 to 180 seconds on the service.... Cuts the number of ads in half (plus associated revenue for the networks) Article above.....

One way to tighten the rope.......

It also reduces their ad load and lowers the likelihood people will pay for fewer ads option. Additionally if you read the last sentence...they outpaced the demand and had to lower their costs for ads.

 

[bartholomr4]

It also reduces their ad load and lowers the likelihood people will pay for fewer ads option. Additionally if you read the last sentence...they outpaced the demand and had to lower their costs for ads.

I think the last sentence was referring to the surplus in demand which occurred prior to the reduction in commercials they would allow.

 

[Indy_UK]

At $8 a month, the ad version is a good deal.

If Comcast and Warner sell their % of Hulu and leave the platform, is there enough content even with the Fox deal to support the service? I'm not a fan of them or their content but I do think Disney needs these 3rd party deals too

 

[Slpy3270]

Fox Networks Group Middle East and Asia head Zubin Gandevia released. He will be kept on during a transition period in SE Asia. Other Fox executives in the region are moving to Disney.

Disney Gives Leadership Roles to Several Fox Staffers in Asia Reshuffle

Disney is to keep several prominent Fox staff members in leading roles across Asia following the completion of the two companies' merger.

variety.com

 

[Darkprime]

Justice Department Warns Academy Over Potential Oscar Rule Changes Threatening Netflix (EXCLUSIVE)

The Antitrust Division warns that the proposed changes may be designed to shut out Netflix and other potential competitors.

variety.com

 

[Darkprime]

Seems reasonable I suppose maybe a bit of a lowball tho? Does anyone know where Netflix was at in a similar time frame after it launched?

 

[Slpy3270]

Fox Networks Group Content Distribution head Prentiss Fraser, based in London, released. She's one of the first European casualties of the merger (we still have no clue on how things will churn fully out there).

Fox Networks Group’s Prentiss Fraser Exits Following Disney-Fox Deal (EXCLUSIVE)

Prentiss Fraser, who headed up London-based Fox Networks Group Content Distribution, was laid off in the wake of the Disney-Fox deal.

variety.com

Insiders on Fox's TV businesses expect more activity to happen come May, following the TV upfronts. Otherwise it's business as usual. Interestingly, both FNG and Disney have offices in the same London neighborhood, so future consolidation of the offices to one building should be easier once that time comes (and it will, trust me).

Two other interesting footnotes in the article:

A source close to the situation told Variety that, post-merger, Disney is not looking to have any positions with global responsibilities to be based in London – hence Fraser’s exit.

No points for guessing why (Hint: it starts with a "B" and ends with a "T").

Disney, through buying a raft of Fox assets, is also now a shareholder in the Endemol Shine Group, a major force in TV production and distribution. Having previously stalled, sales talks with Banijay are back under way. Neither FNGCD or Endemol will be at MipTV in Cannes, the first major international sales market of the year.

As I've said before, Disney doesn't want to get into the reality TV production biz, hence the sale.

Justice Department Warns Academy Over Potential Oscar Rule Changes Threatening Netflix (EXCLUSIVE)

The Antitrust Division warns that the proposed changes may be designed to shut out Netflix and other potential competitors.

variety.com

And yet they were fine with letting this merger go through, so....

 

[ImperfectPixie]

As I've said before, Disney doesn't want to get into the reality TV production biz, hence the sale.

Thank goodness...Lord knows we don't need more of that garbage.

 

[Twilight_Roxas]

Doesn't Disney have some reality shows on ABC?