Disney Encouraged to Sell Off ABC & ESPN as stock faces worst year since 1974

[AndyS2992]

The Walt Disney Company is not just "the Disney brand." It is many brands. Fox doesn't make Disney-branded content and pretty much the only content they make for Disney+ is National Geographic branded. Most of what Fox does is for Hulu, and if Disney wants their bundle in every household, they need content for adults.

Seems unfair to me that Americans need multiple subscriptions when in every other country, all Hulu content is bundled in to Disney+, graphic horror movies, uncensored swearing and nudity, the lot, under the 'Star' brand.

Though from what I can gather, Americans won't accept adult content on Disney+ as it is seen as for families and children whereas the rest of the World doesn't care.

 

[CaptainAmerica]

Seems unfair to me that Americans need multiple subscriptions when in every other country, all Hulu content is bundled in to Disney+, graphic horror movies, uncensored swearing and nudity, the lot, under the 'Star' brand.

Though from what I can gather, Americans won't accept adult content on Disney+ as it is seen as for families and children whereas the rest of the World doesn't care.

Latin America gets live sports too.

That said, there's a lot of speculation that Disney+ in the States starts looking like the international product once the Hulu situation with Comcast is resolved.

 

[doctornick]

We are just going to have to agree to disagree, even though I'm mostly agreeing with you, because it's the internet and you can't concede any points in an argument...

No, Disney releases adult content under a different brand (as I stated), but it will be put in Disney+ because the content is owned by the Walt Disney Company, further eroding the Disney brand. So far, the R rated movies are fairly few on Disney+ and the only ones I know of are comic book genre (like Deadpool). Simpsons is on Disney+. It is owned by the Walt Disney Company. I loved the Simpsons (haven't watched in forever, but have no problem with it). But, it is NOT Disney, IMO. (Orville, which I just watched and thoroughly enjoyed was another example). Brand needs to have meaning especially when the main thing you sell is your brand (magical, family, insert marketing adjective).

Yes. I have long commented on how this is an "issue" for the Disney company since there are two distinct meaning for the term "Disney". There's the family friendly content associated strongly with the animated films and the parks plus other generally wholesome live action stuff like what is on the Disney Channel. Then there is The Walt Disney Company which has not only that Disney brand but also Pixar, Marvel, Lucasfilm/Star Wars, ESPN, ABC, old Fox properties, etc. Very diverse things.

The issue is that when rolling out a streaming service, they had to make a decision on how to name it. Using the Disney brand as the name was very understandable given how strong and well known it is, but has the issue that it is makes it a bit confusing to the consumer as to whether Disney+ is just "Disney brand" things or all of the "Disney company" things. I suppose they could have used something like Star/Hotstar to name the service or in the future maybe use Hulu as the umbrella term but Disney+ is so well known now that it creates it's own issues. In hindsight, perhaps something a little distinct or off-beat like calling it "Walt" might have worked to help separate from "Disney brand" and make it clearer that Disney was a subbrand on the service.

Iger wanted Disney+ to be the new Netflix instead of the new Disney Channel and replacement for DVD sales. That is the fundamental problem, IMO.

Ok, this is where I would disagree. How is this a "problem"? Pivoting to streaming was the absolute right things to do and the right time to do so and Disney alone among legacy media companies really had the strength to make it work. They absolutely have the ability to challenge - and in the longer term IMHO beat - Netflix at this. And, yes, that should involve having streaming services that is not only for families but has general content for everyone. In the US that will likely end up being a merger of Disney+ and Hulu (+/- ESPN perhaps) at some point.

I agree that there is an issue about "what to call it" but not in terms of "should it be done".

 

[mightynine]

If only there were this singular provider that consumers could go to which could aggregate all these separate properties and deliver them to the consumer through a single portal maybe over a single cable.

But the media companies would love for streaming to win out, because instead of getting pennies per cable subscriber, there's the chance of making dollars.

However, they now have to deal with the churn issue, because it's far easier to cancel a streaming service than your cable (unless those companies have made it easy to do so online, I haven't subscribed to cable in years).

Will there be retention departments? Like when I go to cancel my Sirius XM subscription and get a yearly offer that's far less than what I'd pay monthly.

I also wonder if we might not end up with something similar to cable. Could a company that rhymes with Fox and starts with a C (yes, it got edited out), for example, strike a deal for their internet customers that allows for access to Disney+, Paramount+ and whatever HBO Max becomes?

 

[orky8]

Ok, this is where I would disagree. How is this a "problem"? Pivoting to streaming was the absolute right things to do and the right time to do so and Disney alone among legacy media companies really had the strength to make it work. They absolutely have the ability to challenge - and in the longer term IMHO beat - Netflix at this. And, yes, that should involve having streaming services that is not only for families but has general content for everyone. In the US that will likely end up being a merger of Disney+ and Hulu (+/- ESPN perhaps) at some point.

I agree that there is an issue about "what to call it" but not in terms of "should it be done".

I completely agree with your first point - perhaps calling it Disney+ was the real problem and they should have just called it something else. On the second point, I disagree, but only because I don't think this is a business Disney should have gotten itself into. In my opinion, Disney should have just continued to license their content - and much more broadly. Their distribution methods was absolutely changing - cable and physical media are both dying. The entire media industry was terrified that what happened to the music industry would happen to them and so they decided they want to be the distributor and take all the pie instead of just their cut, which had never been the arrangement before.

Instead, they should have let Apple/Netflix/Amazon be the distributors and have to deal with subscribers and monthly rates and The Walt Disney Company can charge them a licensing fee for all its content without any branding issue - much like it did with cable companies. Disney didn't become a cable company. It didn't become a theater company. But for some reason all these companies want to become a streaming company, perhaps because they think the fixed cost barrier to entry is lower, and I'm not sure that's gonna work out as well for them as they all wanted as all these companies are competing fiercely with expensive content to lure and keep subscribers and as soon as they stop it's very easy to drop these subscriptions (unlike cable). Iger sold Disney+ as a loss leader, they'll get all these subscribers with expensive content to lure them in, and then eventually be able to stop making the content. Instead they are losing billions on Disney+ with no end in site (and I don't think that loss even really calculates the gross overpayment for Fox). And, as soon as they start reducing expenses on Disney+ content, a current prices, they will see a flood of people leaving the service.

Instead, let Disney+ be the replacement for DVD sales with a modest price, not the original content destination and certainly not the face of your brand, which up until this point had a clearly iconic face. Perhaps the real solution is Congress should stop extending Disney's copyright on Mickey (and others), but that's a major digression...

 

[doctornick]

But the media companies would love for streaming to win out, because instead of getting pennies per cable subscriber, there's the chance of making dollars.

However, they now have to deal with the churn issue, because it's far easier to cancel a streaming service than your cable (unless those companies have made it easy to do so online, I haven't subscribed to cable in years).

Will there be retention departments? Like when I go to cancel my Sirius XM subscription and get a yearly offer that's far less than what I'd pay monthly.

I also wonder if we might not end up with something similar to cable. Could a company that rhymes with Fox and starts with a C (yes, it got edited out), for example, strike a deal for their internet customers that allows for access to Disney+, Paramount+ and whatever HBO Max becomes?

Regarding retention, I suspect that the eventual outcome will be contracts for 6mo to a year rather than monthly subs. Once the number of streamers gets reduced due to attrition or consolidation, the remaining ones will be able to throw weight around and be more aggressive (less consumer friendly) in their subscription terms.

As for the final point, I wouldn't be surprised to some aggregators to a bunch of streamers at once. Could easily make sense for the "live TV" ones like YouTubeTV, Sling, etc to offer a "channel" of Paramount+ or Peacock or whatever as part of their TV channel offerings.

 

[doctornick]

Iger sold Disney+ as a loss leader, they'll get all these subscribers with expensive content to lure them in, and then eventually be able to stop making the content. Instead they are losing billions on Disney+ with no end in site (and I don't think that loss even really calculates the gross overpayment for Fox). And, as soon as they start reducing expenses on Disney+ content, a current prices, they will see a flood of people leaving the service.

Huh? Iger never "sold Disney+ as a loss leader" - in fact, they specifically have said that they projected profitability in late 2024 or 2025. They were willing to accept losses right now as they built up the service but a huge part of the expense that is keeping the service in the red is the start up costs in (first) building the service in general and (over time) rolling out in various countries which is a ton of infrastructure. But as we have seen with Netflix, there is an ability to actual make a profit once that large outlay is completed (Netflix has essentially rolled out everywhere of consequence except for China). Sure, it costs a ton to make content - and that will continue to be the case for Disney+ and all streamers as they seek to retain costumers - but with sufficient subscription numbers and increased monthly costs (which is coming, more on top of what has already happened) or revenue from ad tiers the revenue will be able to be sufficient.

 

[Jrb1979]

Exactly my take. I already have prime so caught Thursday night games. My cable which is just local stations I catch Sunday games. Screw Monday night.. not paying for it.

If I was Iived in the US I would subscribe to ESPN+ for the NHL package alone.

 

[AndyS2992]

Disney has access to such a huge back catalog of stuff which still isn't on the service, they could keep adding things without making new content for a while if they were really feeling the pinch on new productions.

 

[orky8]

Huh? Iger never "sold Disney+ as a loss leader" - in fact, they specifically have said that they projected profitability in late 2024 or 2025. They were willing to accept losses right now as they built up the service but a huge part of the expense that is keeping the service in the red is the start up costs in (first) building the service in general and (over time) rolling out in various countries which is a ton of infrastructure. But as we have seen with Netflix, there is an ability to actual make a profit once that large outlay is completed (Netflix has essentially rolled out everywhere of consequence except for China). Sure, it costs a ton to make content - and that will continue to be the case for Disney+ and all streamers as they seek to retain costumers - but with sufficient subscription numbers and increased monthly costs (which is coming, more on top of what has already happened) or revenue from ad tiers the revenue will be able to be sufficient.

We're saying the same thing - perhaps I used the wrong term as I agree it was not intended to perpetually be sold at a loss. Disney+ was to be sold at a loss for the first few years was the pitch. Turning that corner to profitability may prove far more difficult or short lived and come with losses elsewhere in the company not directly captured.

 

[fractal]

Disney Analyst: Spinning Off ESPN, ABC Is “Best Path Forward”:​

Disney Analyst: Spinning Off ESPN, ABC Is “Best Path Forward”

"We see it as a reasonably probable late-'23 event," writes Wells Fargo's Steven Cahall.

www.hollywoodreporter.com

Disney stock on its way to worst year since 1974 after ‘Avatar’ sequel disappoints:​

Disney stock on its way to worst year since 1974 after 'Avatar' sequel disappoints

"Avatar: The Way of Water" couldn't reverse Walt Disney Co.'s recent stock funk.

www.marketwatch.com

Has Iger been brought back to break up the company?

I said that the day it happened. Either break it up or sell it all. Right now it seem Apple would be the most logical based on their balance sheet and market cap.

 

[Slpy3270]

Disney has access to such a huge back catalog of stuff which still isn't on the service, they could keep adding things without making new content for a while if they were really feeling the pinch on new productions.

I mean they still have to make money off that catalog and making it wholly exclusive on a service with little to no advertising (especially when it's digital ads, which brings in lower rates) isn't going to make them jack. Hence why they're still licensing some titles to other networks and services (HBO, Starz, Showtime, Netflix, USA Network, Nickelodeon, AMC, TBS/TNT, etc.) in addition to airing some on their own ad-supported networks.

I said that the day it happened. Either break it up or sell it all. Right now it seem Apple would be the most logical based on their balance sheet and market cap.

FTC and a Dem administration would let paint dry than let Apple buy Disney.

Also, the last time a technology company bought a media giant, it....didn't go well.

 

[Figments Friend]

…I’ll remind

View attachment 686778

And look at how happy he looks in doing it…

Disturbing, in some respects …..
Yes.


-

 

[Sirwalterraleigh]

If I was Iived in the US I would subscribe to ESPN+ for the NHL package alone.

That’s the only reason I have it…and I cancel it the minute the Pen’s 6th string echl goalie gets knocked out In the spring

 

[Goofyernmost]

Yes, I think you are right. Except to spend $100M+ reskinning one of the most beloved rides instead of adding desperately needed capacity.... Though, I guess if you remove enough AAs and effects, the costs could be justified in a spreadsheet.

Unfortunately that was planned a few years ago and they had a unwarranted concern about the connection to Song of the South, when it isn't really, so they decided to end the discussion and replace it. As of last October it has been there for 30 years. I hate to see it go, especially for the reasons they are doing it, but parks do have to change up occasionally to prevent them from being stale. I'm not happy about it, but, I am hopeful that they do a good job with the replacement. Not that their record has been good about such a thing. The thing is that when Splash Mountain was built Disney cared more about show than about cost, now that is all they worry about.

 

[monothingie]

But the media companies would love for streaming to win out, because instead of getting pennies per cable subscriber, there's the chance of making dollars.

However, they now have to deal with the churn issue, because it's far easier to cancel a streaming service than your cable (unless those companies have made it easy to do so online, I haven't subscribed to cable in years).

Will there be retention departments? Like when I go to cancel my Sirius XM subscription and get a yearly offer that's far less than what I'd pay monthly.

I also wonder if we might not end up with something similar to cable. Could a company that rhymes with Fox and starts with a C (yes, it got edited out), for example, strike a deal for their internet customers that allows for access to Disney+, Paramount+ and whatever HBO Max becomes?

So has streaming peaked?

I’d argue that if you go by subscriber numbers alone, there isn’t a lot of growth left. Also at what magic subscriber level does that translate into profitability?

Seems like people are looking for an unprofitable unicorn.

 

[doctornick]

So has streaming peaked?

I’d argue that if you go by subscriber numbers alone, there isn’t a lot of growth left. Also at what magic subscriber level does that translate into profitability?

Seems like people are looking for an unprofitable unicorn.

Netflix has has some profitable quarters at their current subscription levels. To answer the question, My personal estimate is something around 200M subscribers worldwide at around $20/month (today's dollars) ad free tier should enable profitability while still allowing spends of like $15-20M a year for top notch content.

Disney is already at subscriber levels that will support profit. They just need to get more revenue per subscriber (either higher monthly fee or ads or both) while maintaining that same customer base. They also need to complete the roll out of the service which costs a ton in setting up in so many different countries. Disney projected they'd be profitable with streaming by the end of 2024, but Wall Street wants to get there quicker.

It will be interesting to see where the numbers are for Disney+ in upcoming quarters with the higher prices and ad tier existing.

 

[monothingie]

Netflix has has some profitable quarters at their current subscription levels. To answer the question, My personal estimate is something around 200M subscribers worldwide at around $20/month (today's dollars) ad free tier should enable profitability while still allowing spends of like $15-20M a year for top notch content.

Disney is already at subscriber levels that will support profit. They just need to get more revenue per subscriber (either higher monthly fee or ads or both) while maintaining that same customer base. They also need to complete the roll out of the service which costs a ton in setting up in so many different countries. Disney projected they'd be profitable with streaming by the end of 2024, but Wall Street wants to get there quicker.

It will be interesting to see where the numbers are for Disney+ in upcoming quarters with the higher prices and ad tier existing.

I’m not so sure the ad tier will be the silver bullet all the platforms are expecting it to be. While there will be subscribers with ads, I believe it will be more of a choice between the no ads tier or nothing at all.

With regards to cost, I thought the big expense was content creation? Having access to the vault of IP doesn’t seem to be as big of a sell as anymore.

How much did Amazon pay for their LOTR flop?

 

[fgmnt]

Wall Street love to write stories about large F100 companies selling parts of themselves to other F100 companies. I think Disney would sell ESPN or ABC if someone came to them and overpaid, but for now they are two of the strongest brands in television and both serve as part of trying to transition from linear to D2C.

 

[mightynine]

So has streaming peaked?

I’d argue that if you go by subscriber numbers alone, there isn’t a lot of growth left. Also at what magic subscriber level does that translate into profitability?

Seems like people are looking for an unprofitable unicorn.

Has streaming peaked....maybe? Maybe not? If I had that answer, I'd be selling it to the highest bidder.

There's the subscription service route (D+, Netflix, etc.) and then there's the FAST (That's Free Ad-supported Streaming TV, FYI) service route (Pluto TV, Tubi, etc.) - maybe the latter wins out because it gives the closest "lean-back" experience like cable TV, i.e. pick a channel and watch as background noise, and the former becomes the streaming equivalent of an HBO or Showtime subscription in the cable days.

I would not be surprised - no, I'd be shocked - if Disney isn't looking at some FAST channels. Imagine a "Disney Channel Rewind" FAST channel featuring blocks of That's So Raven and Hannah Montana and other shows of that era - or bring back the "Vault Disney" moniker for a channel featuring classic cartoons and movies.

Here's another take and more ideas: https://thestreamable.com/news/ten-fast-channels-disney-plus-should-consider-launching-in-2023

It could give a "free" tier to D+ or these could also be offered to other services, even the ones by tv manufactures like LG Channels or Samsung TV Plus.

It's not that it's an unprofitable unicorn - right now, these companies just want money and are still trying to figure out where it is and how to get, since they won't just take the licensing money from Netflix anymore apparently. People abandoning cable means they are losing money on that front, dealing with churn on streaming services will cut into another revenue source, and then there's the movie industry outside mega-blockbusters still trying to figure out what it will be.

That said, Disney crossed the $4 billion mark at the global box office this year, so hold off on passing the hankies on that front.

Disney Crosses $4 Billion At Global Box Office, Propped By ‘Avatar: The Way Of Water’

Walt Disney Crosses $4 billion for 2022: Box Office

deadline.com