Comcast Corp. president Mike Cavanagh said Comcast is open to options for Hulu, although a sale to Disney still remains viable.
Comcast President Mike Cavanagh
Comcast and Disney have a 2019 agreement in place whereby Disney would acquire the cable operator’s remaining 33% stake in Hulu for a minimum $27.5 billion acquisition price in early 2024. Disney owns majority operating control following its $71 billion acquisition of 20th Century Fox. Since that time, Comcast Corp. chairman/CEO Brian Roberts has expressed interest in buying out Disney’s majority stake, while returning Disney chief executive Bob Iger now says purchasing Comcast’s stake is not a high priority.
Speaking March 8 on the Morgan Stanley Technology, Media and Telecom Conference in San Francisco, Cavanagh reiterated that the media giant likes where it sits in the M&A discussion.
“We’re very happy if [a Disney sale is] the way it turns out; it would be great,” Cavanagh said. “But, if there’s something different that comes along, we would have to consider things. We won’t do something [different] unless it’s better in our minds.”
Wall Street investment firm Citi contends Disney may be motivated to sell its majority ownership stake in Hulu (rather than buy Comcast’s minority stake) in a move aimed at reducing Disney’s $1.1 billion Q1 direct-to-consumer operating loss, which included a decrease in Hulu results.
In 10 months, under a fiscal arrangement, Comcast can force Disney to buy its 33% stake in Hulu for at least $27.5 billion, or Disney can force Comcast to sell its stake. The situation emerged following Disney’s $71.3 billion acquisition of 20th Century Fox in 2019.
Jason Bazinet
For Comcast, acquiring Disney’s 66% stake (or another 33% for less than $27.5 billion and majority control) would be a costly “win,” but it could also add 48 million Hulu paying subscribers to NBCUniversal’s Peacock paid sub base of 20 million.
“We believe [Disney] is less interested in a mass market DTC offering,” analyst Jason Bazinet wrote in a note. He attributed this thinking to Disney CEO Bob Iger’s fiscal call comments and related media statements that the company would refocus efforts on core brands and franchises.
On Feb. 19, Iger, in an interview with CNBC, said “everything was on the table” in regards to Hulu’s future with Disney.
“We are intent on reducing our debt,” Iger said. “I’ve talked about general entertainment being undifferentiated. I’m not going to speculate if we’re a buyer or a seller of it. But I’m concerned about undifferentiated general entertainment. We’re going to look at it very objectively.”
Bazinet said he believes a Comcast majority purchase of Hulu would accelerate the cable operator’s DTC operating scale “with potential financial synergies.”
“[It could] accelerate [Comcast’s] push into live streaming aggregation, and improve its strategic positioning within the media category,” he wrote.
Comcast chairman/CEO Brian Roberts, speaking last September at a Wall Street event, hinted the media company would be interested in acquiring Disney’s stake.
“Hulu is a phenomenal business,” Roberts said. “Its scale is fantastic. I believe if Hulu was put up for sale, Comcast would be interested. So would a lot of other tech and media companies. You would have a robust auction.”
NBCUniversal’s decision to abbreviate the box office window to 21 days on many releases — while Universal Pictures tallied the second-highest box office take in 2022 — remains an ongoing strategy, according to Comcast CFO Jason Armstrong.
The company is expediting release of titles to digital in the premium digital rental and sales window as well as to Peacock paid streaming subscribers.
Universal Pictures’ 2022 box office tally was driven by Jurassic World Dominion, Minions: The Rise of Gru, Nope, The Bad Guys, The Black Phone, Halloween Ends, Violent Night, Puss in Boots: The Last Wish and Sing 2, among other titles.
Comcast CFO Jason Armstrong
Speaking Feb. 27 at the 31st Annual Deutsche Bank Media, Internet and Telecom confab in Palm Beach, Fla., Armstrong said early access to Universal movies on Peacock helped grow the platform’s paid subscriber base by 5 million in the most-recent fiscal quarter (ended Dec. 31, 2022), which translated to 11 million new subs for the year for a total of 20 million.
Average monthly Peacock user engagement now stands at around 20 hours.
“Content success and availability has largely driven that,” Armstrong said, adding that legacy Pay 1 movie distribution windows to third parties, live access to World Cup soccer and the NFL, licensed Hulu content, and next-day access to Bravo shows have all transitioned to Peacock.
The CFO said early viewer response to Peacock original shows “Poker Face” and “The Traitors” has been encouraging as well.
“That’s all beneficial to streaming,” Armstrong said, adding that all episodic programming, in addition to live sports, is now jointly licensed for concurrent linear TV and streaming distribution.
The executive said that while linear TV subscriptions and advertising revenue is declining, the business remains highly profitable.
“We have to preserve the cashflow characteristics of [linear TV], but doing so with an eye towards making sure we’re migrating to streaming for the right continuum,” Armstrong said.
At the same time, NBCUniversal’s heavy emphasis on streaming has skyrocketed related opportunity and technology costs in the direct-to-consumer business segment, resulting in a projected $3 billion operating loss in 2023.
“We said this year would be the peak loss year and we look to rebound after 2023,” Armstrong said. “The trajectory beyond this is more favorable.”
Peacock recently disclosed it would no longer accept new free ad-supported subscribers, in a move that will eventually force existing Xfinity pay-TV subscribers to pay for SVOD access.
“We think there is a big market for [less-expensive] paid AVOD subscription service,” Armstrong said. “When we were leaning into streaming, we were early to figure out that was going to be a super interesting large market segment to target. The good news is that linear plus streaming is a growth business. That’s true for us [and] that’s true for the industry.”
Comcast Feb. 21 announced it has received a technology and engineering Emmy award for its sports viewing experiences across the Xfinity, Sky and Peacock platforms. The National Academy of Television Arts and Sciences recognized Comcast for using artificial intelligence to provide viewers with an easier way to catch up on key moments from live sporting events.
Specifically, Comcast’s VideoAI technology analyzes video streams in real-time and detects key moments using various audio, visual and textual cues. For sports, these include points/goals, penalties, and other major moments. As the live event unfolds, indexed highlights are compiled as they happen into an interactive format, giving viewers a quick summary of the most important highlights after the play/moment has concluded.
“[Artificial intelligence] is a transformative technology, giving us the ability to rethink how we deliver innovative entertainment experiences to our global customers,” Fraser Stirling, global chief product officer, at Comcast, said in a statement.
NBCUniversal bowed the AI technology on Peacock for its Premier League soccer matches. “Peacock Key Plays” puts highlights as they happen on an interactive timeline that can be accessed at any point during a live match, giving customers the ability to watch just one key moment or all of them as a playlist.
On Xfinity, AI is available on DVR recordings of select events like the FIFA Soccer World Cup, tagging key plays in the recording’s playback bar, giving viewers a quick way to recap all the biggest moments. Xfinity recently made Sports Highlights available for the FIFA World Cup and plans to extend the feature to more sports this year.
Comcast is now offering the technology to distribution customers as part of its product suite, producing actionable metadata to drive a continuously expanding number of use cases, from content discovery to contextual advertising.
Comcast Xfinity pay-TV and Flex members are losing free access to the Peacock streaming service.
Since the launch of the Peacock subscription streaming video platform on April 15, 2020, Comcast Xfinity pay-TV and Flex members have had free access to the $4.99 monthly (with ads)/$9.99 (without ads) service.
Beginning April 3, new Xfinity pay-TV subs and Flex users will have to pay for Peacock, which ended the most-recent fiscal period with 20 million paid subscribers — the lowest tally among major SVOD platforms. Current Xfinity/Flex members will have to begin paying for Peacock beginning June 26. The details were disclosed in an internal Comcast memo posted on social media platform Reddit.
“As part of Peacock’s growth strategy, we are shifting our focus to the Premium offering, which is more reflective of the brand and the unique experience we can bring subscribers,” an NBCUniversal spokesperson said in a statement first reported by Cord Cutters News.
NBCUniversal CEO Jeff Shell, at a recent Wall Street event, indicated Xfinity subscribers would have to begin paying for Peacock “at some point.” Peacock stopped offering free ad-supported access at the beginning of February.
With Disney facing a 2024 deadline to acquire Comcast’s outstanding ownership stake in Hulu for at least $27.5 billion, CEO Bob Iger is having second thoughts on the acquisition option.
Speaking Feb. 9 on CNBC’s “Squawk on the Street” Wall Street morning show, Iger, who just announced $5.5 billion in cost-cutting measures that include 7,000 layoffs across Disney, said management’s previous mindset to acquire Hulu outright has changed.
“Everything is on the table right now, so I am not going to speculate whether we are a buyer or a seller of it,” Iger said.
Previous CEO Bob Chapek, who Iger replaced in December, had indicated a desire to acquire Comcast’s 33% stake — but at a lower price. Meanwhile, Comcast CEO Brian Roberts has told investor groups that he is open to buying Disney’s stake.
When asked by show host David Faber whether he would be open to Comcast acquiring Disney’s stake in Hulu, the CEO said management would be “open minded” to that.
In its latest fiscal report, Hulu added 700,000 subs to end 2022 with 43.5 million subscribers. The platform also saw quarterly operating expenses and production costs balloon to $2.1 billion.
“I obviously have suggested that I’m concerned about undifferentiated general entertainment [costs], particularly in the competitive landscape that we are operating in, and we are going to look at [Hulu] very objectively and expansively,” Iger said.
Comcast Corp. Jan. 6 announced that Jason Armstrong has been promoted to CFO after serving nine years in several financial management positions at the media giant, including most recently as deputy CFO and treasurer. He succeeds Mike Cavanagh, who was named president of Comcast in October.
Jason Armstrong
“Jason is ideally suited to be our next CFO,” Cavanagh said in a statement. “He is a trusted voice in the financial community, has a great understanding of our company, and is well respected by our management team.”
As deputy CFO, Armstrong oversaw the finance functions at Comcast and managed the corporation’s capital formation, capital allocation, credit-related matters, and investment management activities, working closely with the management teams across Comcast Cable, NBCUniversal and Sky. Before that, he served as treasurer of Comcast, as CFO at Sky, and as head of investor relations and finance at Comcast. Prior to joining Comcast in 2014, Armstrong spent 13 years at Goldman Sachs where he served as managing director and leader of the firm’s cable and telecommunications research group. He earned a B.S. degree in Economics from Duke University.
Comcast Jan. 3 announced the launch of “Free This Week,” a new year-long marketing campaign that aims to offer Xfinity customers more reasons to remain pay-TV subscribers. The program offers subs access to a weekly selection of content from top participating streaming services and premium networks.
The programming will be curated and available on X1 and Flex, in addition to the Xfinity Stream app and Xumo’s XClass TV.
The first two weeks will feature free access to wellness apps such as The Great Courses, Gaia, One Day University, Gaiam TV, Sweat Factor and FitFusion by Jillian Michaels. Future participating networks and streaming services include HBO Max, Paramount Global’s Showtime, Revolt, History Vault and Lifetime Movie Club, among others.
The campaign comes 10 years after Xfinity’s inaugural free content sampling, Watchathon Week, and represents an evolution of the company’s free programming strategy providing customers with something free to watch, every week of the year. New data released by Xfinity shows viewership typically doubles during the time a network or streaming service participates in a content sampling initiative.
“We are offering customers a no-strings-attached chance to discover something new every week of the year, building on the great success previously established with events like Watchathon Week and Free TV Week,” Sophia Ahmad, EVP and CMO for Comcast Cable, said in a statement.
Charter and Comcast’s joint streaming venture has a name: Xumo.
The cable pay-TV operators Nov. 2 announced that their streaming platform joint venture will now operate and conduct business as Xumo, evolving the brand from a free ad-supported streaming TV (FAST) service to an entertainment ecosystem inclusive of all streaming devices and content holders.
Charter and Comcast also announced that Flex, the 4K streaming device Comcast licensed to the joint venture, will become Xumo Stream Box, and XClass TV will become Xumo TV. Both devices will remain powered by Comcast’s global technology platform and feature an entertainment experience designed to make it easy for consumers to find and enjoy their favorite streaming content through a world-class user interface and voice search. The first Xumo branded devices will launch in 2023, distributed by Comcast, Charter and Walmart, with additional distributors to be announced in the future.
“The new Xumo will bring industry leading streaming and aggregation technology nationwide through its expanding content, product line up, and retailer relationships,” Marcien Jenckes, president of Xumo, said in a statement.
Xumo’s current FAST service, which consists of linear channels and on-demand options, will be rebranded Xumo Play and continue to be available as an app on other streaming platforms.
Lionsgate+, the rebranded Starzplay subscription streaming video service, Oct. 25 announced it has joined the Comcast-owned Sky satellite TV platform, including Sky Q, Sky Stream and Sky Glass in the U.K., Ireland, Italy and Germany — priced at £5.99/€4.99 ($6.85) monthly.
Lionsgate+ original content includes texting/suicide criminal case “The Girl from Plainville,” gender-bending “The Great,” political thriller “Gaslit,” period dramas, “Outlander,” “The Serpent Queen” and pending “Dangerous Liaisons,” in addition to movies and catalog fare.
“Partnering with Sky, Europe’s premium content provider, is a key strategy in strengthening Lionsgate+’s presence in Europe and will give even more subscribers access to our massive offering of curated content,” Superna Kalle, president, international networks at Starz, said in a statement. “We look forward to strengthening our relationship with viewers through Sky who share our commitment to delivering audiences exceptional content paired with a premium user experience.”
