ESPN+ Streaming Video Service Tops 1 Million Subs

The Walt Disney Co.’s direct-to-consumer and international segment Sept. 20 announced that ESPN+, the subscription streaming video service, has surpassed 1 million paying subscribers since its April launch.

The $4.99 monthly service ($49.99 per year) represents Disney’s first foray into branded standalone OTT video – a strategy Disney began implementing with the $3.75 billion acquisition of BAMTech in 2017.

“Reaching one million paid subscribers … in such a short time is an incredible testament to the teams from DTCI and ESPN who have worked tirelessly to bring this product to market,” Kevin Mayer, chairman, direct-to-consumer and international, The Walt Disney Co., said in a statement.

ESPN+ is intended to complement the ESPN pay-TV network, while focusing on global sports and original programming, including new “30 for 30 documentary, “Seau” (directed by Kirby Bradley); original studio programs, “Always Late with Katie NolanDetail from Kobe Bryant, The Fantasy Show with Mathew BerryESPN FC”, “In The Crease”, “Ariel and the Bad Guy with Ariel Helwani; original series like Earn Everything” about Duke Basketball, NBA: YearOneDraft Academy and Quest for The Stanley Cup; and the entire “30 For 30” library, among other shows.

ESPN+ is part of the ESPN app available across mobile (iOS, Android) and living room devices (Android TV, Apple TV, Chromecast, Fire TV, Roku. ESPN+ is also available on the Web through ESPN.com.

An update to the ESPN App (v 6.2) last month integrated “ESPN Insider” into the ESPN+ service, enabling subs access to editorial analysis on players, teams, and leagues, as well as analytics tools to help users get an edge in their fantasy games.

ESPN+ subs get a differentiated advertising experience throughout the entire ESPN App or website, with no display ads and no pre-roll ads within video content (ads remain in the natural advertising breaks of live sports content).

“Combining sports, technology and the ESPN brand is a very powerful combination,” said Jimmy Pitaro, president of ESPN and co-chair, Disney Media Networks.

 

Fox, Comcast Extend Offer for Sky to Oct. 6

As expected, 21stCentury Fox has extended its offer for remaining shares of U.K. satellite TV distributor Sky to Oct. 6 – the same date Comcast extended its competing offer.

Comcast currently holds the higher bid: $34 billion (£14.75 per share) compared to Fox’s £14 per share. Yet neither offer has resonated with Sky shareholders, with less 30% of shareholders tendering Comcast’s offer compared to 0.07% for Fox’s offer.

Fox, which is controlled by Rupert Murdoch, currently owns 39% of Sky. The Walt Disney Co. outbid Comcast for select Fox assets, which include 20thCentury Fox Film and Sky.

With Sky’ stock closing down Sept. 17 at £15.78 per share in London, it’s clear investors are hoping for a superior bid from either Comcast, Fox or even Disney.

Following the deadline, corporate takeover rules in the United Kingdom mandate a five-day sealed auction overseen by regulators with Comcast, Fox and Sky agreeing on the terms.

 

 

 

Fox Doubles Fiscal-Year Hulu Equity Loss

Hulu, the SVOD service co-owned by The Walt Disney Co., Comcast, 21st Century Fox and WarnerMedia, may have 20 million subscribers, an Emmy-winning series (“The Handmaid’s Tale”) and an online TV component. It also has burgeoning costs for its corporate owners.

Fox on Aug. 8 disclosed it generated a $127 million fourth-quarter (ended June 30) equity loss for its 30% stake in Hulu. That was up 135% from an equity loss of $54 million during the previous-year period.

For its fiscal year, Fox posted a Hulu equity loss of $445 million – more than double the $215 million equity loss last year.

With Disney assuming Fox’s Hulu stake (for 60% controlling stake) as part of its $71 billion acquisition of 20thCentury Fox Film and other Fox assets, expect the Mickey Mouse company’s equity loss to increase.

Disney CFO Christine McCarthy alluded as much on the company’s Aug. 7 fiscal call.

“The higher losses at Hulu were primarily driven by higher programming and labor costs, partially offset by higher subscription and advertising revenue,” McCarthy said

Indeed, Disney attributed a $49 million second-quarter equity loss to Hulu, which mushroomed to a $193 million through the first six months of the year.

Hulu lost $920 million in 2017 compared to a loss of $531 million in 2016. The fiscal loss is reportedly projected to reach $1.7 billion this year as the service ups original content spending on “The Handmaid’s Tale,” “Marvel’s Runaways,” “Future Man,” and “The Doozers,” among others.

 

Disney CEO Bob Iger: OTT Video No. 1 Priority, Not Competing Against Netflix

With the Walt Disney Co. planning to launch a branded over-the-top video platform in late 2019, the SVOD service, along with digital platform ESPN+ and majority ownership of Hulu will dominate the company’s objectives in the coming year, according to CEO Bob Iger.

Speaking Aug. 7 on the fiscal call, Iger said OTT video is a reality and here to stay. He said the pending Disney services would focus on incorporating core brands, including Marvel, Star Wars and Pixar, in an effort to complement, and to a lesser extent, compete with SVOD platforms such as Netflix, which is spending $8 billion this year alone on original content.

“The launch of [direct-to-consumer] product at the end of 2019 is the biggest priority of the company during calendar 2019,” said Iger, adding that the service would initially target core Disney fans.

“There will be significant amounts of support given across all of our assets to see to it that the platform launches successfully,” he said.

The service/app will feature original branded series and movies, including the first-ever live-action “Star Wars” series, and new episodes of the “Star Wars: Code Wars” animated series; a live-action version of The Lady and the Tramp, in addition to other new series based on popular Disney properties.

“The [20th Century Fox Film] acquisition brings even more opportunity to create original programming for this platform,” said Iger, who added Disney plans on walking before running with the new service.

“It’s takes time to build the kind of content library [for the service that] ultimately we intend to build,” he said. “Because the app will feature Pixar, Disney, Marvel, National Geographic, Lucasfilm and Star Wars, we feel that it doesn’t have to have anything close to the volume of what Netflix has.”

“This gives us the ability to not necessarily be in the volume game, but be in the quality game,” said Iger. “It’s not as though the cupboard’s going to bare.”

Iger said the recently launched ESPN+, pending family-oriented Disney service along with the existing Hulu platform appeal to different consumer tastes and audience demographics.

“As we look at the environment today … we don’t want to go to market with an aggregation play that replicates the multichannel [TV bundle] environment, because we feel consumers are more interested in making [channel] decisions on their own,” said Iger. “We can offer that kind of flexibility to consumers because that’s … what consumer behavior demands.”

The CEO reiterated that the Disney OTT service would be priced lower than Netflix to reflect the difference in content offerings. He said that upon closing the Fox acquisition, Hulu would “also fit into our app strategy.”

When asked how the 2019 theatrical slate could impact the streaming service, Iger said existing distribution windows would be configured to benefit the OTT service. Next year’s slate includes Captain Marvel, Dumbo, Avengers 4, Aladdin, Toy Story 4, The Lion King, Jungle Cruise, Artemis Fowl, Frozen 2 and Star Wars Episode 9.

“For 2019, the studio movie slate is clean and unencumbered,” he said.

Disney, Fox Shareholders Approve Historic Deal

The big deal is on.

As expected, shareholders of The Walt Disney Co. and 21st Century Fox  on July 27 approved Disney’s acquisition of Fox’s entertainment assets, in one of the biggest media mergers of all time.

Investors approved the $71.3 billion deal – first proposed last December – in separate meetings at the New York Hilton. Both meetings were brief, less than 15 minutes. Fox shareholders were told the union would be completed in the first half of 2019.

Indeed, 21st Century Fox, which is selling select Fox assets, including 20th Century Fox Film, and Disney July 26 filed for regulatory approval in Brazil, claiming the merger does not hinder competition.

The shareholder vote came a month, to the day, after Disney won U.S. antitrust approval to buy Fox’s entertainment assets on the condition it divest 22 Regional Sports Networks (RSNs).

Disney had initially offered $52.4 billion to buy the Fox movie and TV assets, but after Comcast Corporation in early June countered with a $65 billion all-cash deal, Disney upped its cash-and-stock offer to $71.3 billion.

A little more than a week ago, Comcast dropped its bid and shifted its focus to buying European pay-TV operator Sky.

Comcast Tops Fox’s Bid for Sky as British Government Greenlights Murdoch’s Offer

NEWS ANALYSIS — As expected, Comcast Corp. increased its all-cash offer for British satellite TV operator Sky to $34 billion (£26 billion), or £14.75 per share, exceeding 21st Century Fox’s revised offer of £14 per share. Fox, which is controlled by Rupert Murdoch, currently owns 39% of Sky.

This came the day before the British government — after months of regulatory review — formally cleared Fox’s pursuit for remaining interest in Sky.

“It’s now a matter for Sky shareholders to decide whether to accept 21stCentury Fox’s bid,” Jeremy Wright, U.K. cultural and media secretary, said in a July 12 statement.

Which could be meaningless considering the third player (Disney) in this high-stakes media consolidation battle last month upped its bid for Fox to $71.3 billion (which includes Fox’s stake in Sky) after Comcast offered $65 billion — topping the Mickey Mouse’s company’s initial $52.4 billion acquisition amount.

Disney CEO Bob Iger has called Sky – with 23 million subscribers in the U.K., Germany and Italy, and a budding over-the-top video business – the “crown jewel” in the Fox deal.

Comcast claims its superior cash offer (Disney’s bid is cash and stock) has been recommended by an independent committee on Sky’s board of directors.

The company says it has the relevant regulatory approvals in the European Union, Austria, Germany, and Italy —  and expects to complete the acquisition before the end of October.

In a statement, the Philadelphia-based media giant said it has long admired Sky and believes the satellite operator is an outstanding company and a great fit with Comcast Cable.

“Today’s [July 11] announcement further underscores Comcast’s belief and its commitment to owning Sky,” said the company headed by cable veteran Brian Roberts.

Fox and Disney shareholders are slated to vote July 27 on the latter’s bid for 20th Century Fox Film, Sky and related assets. This gives Comcast about two weeks to up its Fox bid. Or does it?

BTIG Research senior analyst Rich Greenfield — in response to media scuttlebutt Comcast and Disney could stop the fiscal escalations with Comcast taking Sky and Disney opting for Fox’s assets — says such a move would be detrimental to both sides.

He said combining Disney and 20th Century Fox Film would dwarf Comcast-owned Universal Studios, while Disney abandoning Sky would give Comcast greater distribution.

“Why start a fight you do not want to finish?” Greenfield wrote in a blog note. “If Disney’s acquisition goal is adding 100% owned and controlled subscriber relationships, why go through all this effort and allow Comcast to own all of or at the very least control Sky?”

Fox Tops Comcast’s Sky Merger Offer

The “Sky” is apparently the limit for 21st Century Fox, which on July 11 upped its offer more than 30% for the British satellite TV operator to £14 per share — valuing the company at $32.5 billion. Fox, in late 2016, offered £10.75 per share of Sky stock (61%) it did not already own.

The bid represents an 82% premium on Sky’s £7.69 per share closing price the day before Fox’s initial bid. It also tops Comcast’s rival offer of £12.50 per share.

“As a founding member of Sky, we have remained deeply committed to bringing these two organizations together to create a world-class business positioned to deliver the very best entertainment experiences well into the future,” Fox said in a statement.

It’s a sentiment shared by The Walt Disney Co. and Comcast, which both have competing takeover bids for select Fox assets, including 2oth Century Fox Film and Sky.

Consolidation in the media world is in full swing following AT&T’s $85 billion acquisition of Time Warner as companies grapple with over-the-top video and subscription streaming video behemoths Netflix and Amazon Prime Video.

Disney last month upped its offer for Fox to $71.3 billion after Comcast bid $65 billion — topping Disney’s initial $52.4 billion acquisition amount.

Federal regulators last month approved Disney’s bid after the Mickey Mouse company agreed to divest 22 regional Fox Sports networks. Across the pond, the U.K. Secretary of State is expected rule on the Fox/Sky deal by July 12.

Regardless, Sky shares closed July 10 at £15.01 per share suggesting the sky is indeed the limit for shareholders convinced the bidding war will continue.

Changes at Disney Accelerate as New Digital Streaming Service, Fox Acquisition Loom

Walt Disney Co. is shuffling executives and shuttering animation division Disneytoon Studios, based in Glendale, as it sets up for major changes at the company.

Disney is in the final stages of a possible acquisition of Fox, with shareholders scheduled to vote on the merger July 27. The company is also planning to bow a Disney streaming service next year to compete with the likes of Netflix and Amazon Prime.

Last week, the company placed film marketing president Ricky Strauss in charge of content and marketing for its streaming service. He will handle original film and TV series for the new service. Strauss reports to Kevin Mayer, installed in March as head of Disney’s direct-to-consumer unit. Among Mayer’s duties are leading the ESPN+ streaming service launched this year and the company’s stake in Hulu. Asad Ayaz will take over Strauss’s former role as studio marketing president. Also, theatrical distribution chief Cathleen Taff was upped to president from EVP.

Last week was also a fadeout for Disneytoon Studios, which was known for direct-to-video sequels to The Little Mermaid, Mulan and other Disney classics; the “Fairies” DTV series featuring the Tinker Bell character; and theatrical forays such as Planes: Fire and Rescue.

“After much consideration, we have made the decision to end production activity and close Disneytoon Studios,” a Disney spokesperson said in a statement. The closure, first reported by Indiewire, is expected to result in the loss of an estimated 75 staff positions.

Animation veteran John Lasseter, who spearheaded Disneytoon Studios, was replaced by Pete Docter and Jennifer Lee on the creative team this month after acknowledging a pattern of inappropriate conduct with employees.

Disneytoon Studios’ Shuttering Due to John Lasseter’s Exit?

News that Disney is officially pulling the plug on one of its namesake animation units – Disneytoon Studios – is noteworthy since the business segment was considered dead nearly five years ago.

“Disneytoon Studios, as of now, is pretty well kaput, Steve Hulett, with The Animation Guild, blogged at the time.

After Disney laid off hundreds from the Glendale, Calif.-based facility, a skeleton crew of less than 100 continued — rejuvenated in part by Pixar Animation founder John Lasseter’s personal interest in the company.

What followed was a string of box office and home entertainment hits, including Planes and its sequel, Planes: Fire & Rescue. The unit’s last theatrical release was Tinker Bell and the Legend of the NeverBeast, released in theaters overseas in 2015. Disneytoon most recently focused on direct-to-video DVD releases and Blu-ray Disc titles.

Notable home video releases included the Disney “Fairies” franchise, which featured TinkerBell and the Great Fairy Rescue, TinkerBell and the Lost Treasureand TinkerBell and Her Magical Arrival, among other titles.

A planned movie about the future of aviation from director Klay Hall (Planes) and Bobs Gannaway (Fire & Rescue) is now reportedly abandoned.

“After much consideration, we have made the decision to end production activity and close Disneytoon Studios,” a Disney spokesperson said in a statement.

What wasn’t mentioned was the impact of Lasseter’s resignation at Disney last month following allegations of inappropriate conduct in the workplace. Lasseter had been on a six-month leave of absence following the allegations.

In a statement, Lasseter said he would begin “focusing on new creative challenges.”

Disney, Fox Shareholders to Vote on Merger July 27

The day after The Justice Department June 27 approved The Walt Disney Co.’s $71.3 billion cash/stock acquisition of 20th Century Fox Film (which includes British satellite TV operator Sky Plc.) both Disney and 21st Century Fox announced their respective shareholders will vote July 27 on the mega-merger.

Both companies canceled previously-slated July 10 shareholder votes after Comcast submitted a rival $65 billion all cash offer that trumped Disney’s initial $52.4 billion bid.

The new vote date gives the corporate parent of Comcast Cable, NBC Universal and DreamWorks Animation less than a month to secure a new bid.

Media reports suggest Comcast – whose cable operations are under threat from over-the-top video services such as Netflix and Amazon Prime Video and needs Fox content – will counter.

“We believe another counteroffer from Comcast for Fox is likely,” John Hodulik, analyst with UBS, told Deadline.com.

Moody’s Investor Service reportedly said Comcast’s current offer would push the company’s debt load to more than $170 billion.

While corporate debt is relative, both Fox and Disney contended their deal would pass regulatory muster more easily than Comcast’s. And apparently it did.

While the antitrust unit of the Department of Justice entered into a consent decree with Disney and 21st Century Fox that allows the acquisition to proceed – mandating the sale of the Fox Sports Regional Networks as a requirement – it has made no ruling on Comcast’s offer.

Regardless, Disney has at least 90 days from the date of closing the transaction to complete the sale, with the possibility that the DOJ can grant extensions of time up to another 90 days. The decree is subject to the normal court approval process.

But first, shareholders have to vote.