Bob Iger Steps Down From Apple Board as Streaming War Heats Up

On the heels of Apple’s launch and pricing announcement about its new streaming service, the tech giant has announced that Walt Disney Co. CEO Bob Iger has stepped down from its board.

In a Sept. 13 SEC Filing, Apple disclosed that Iger resigned Sept. 10.

Apple Sept. 10 announced its service Apple TV+ would bow Nov. 1 — a little over a week before the launch of Disney’s streaming service Disney+ Nov. 12 — and at $4.99 — undercutting Disney+’s $6.99 a month regular price (although special offers put the cost under $4 a month).

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Disney+ Sets Key International Launch Dates, Pricing

The Walt Disney Co. on Aug. 19 said its much-ballyhooed new subscription streaming service, Disney+, will launch in Canada and the Netherlands on Nov. 12, the same day it launches in the United States.

The international rollout continues a week later with a push into Australia and New Zealand.

Initial pricing is similar to the United States, where the service will bow at what some analysts call a “Netflix-killing” low price of $6.99 a month.

In Canada, monthly subscriptions will cost CAD$8.99 per month or CAD $89.99 per year. In the Netherlands, subscriptions are 6.99 euros per month, or 69.99 euros per year.

In Australia, Disney+ will cost AUD$8.99 per month or AUD$89.99 per year and in New Zealand, the subscription price will be NZD$9.99 for a month and $99.99 for a year.

The Walt Disney Co. said more international territories will be announced on later dates, and that it expects to stream content through Disney+ in most major global markets within two years.

Disney also announced it has struck global agreements with most major platforms to distribute the Disney+ app across partner mobile and connected TV devices.

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At launch, consumers will be able to subscribe to Disney+ directly or via  in-app purchase and start streaming from the following partner platforms and devices (dependent on country):

  • Apple (iPhone, iPad, iPod touch and Apple TV, and fully integrated with the Apple TV app; customers can subscribe to Disney+ via in-app purchase);
  • Google (Android phones, Android TV devices, Google Chromecast and Chromecast built-in devices);
  • Microsoft (Xbox One);
  • Sony / Sony Interactive Entertainment (PlayStation 4 and all Android-based Sony TVs); and
  • Roku (Roku streaming players and Roku TV models).

Last week, Disney+ said it has tapped former Luke Bradley-Jones, a former Sky executive, as SVP, Direct to Consumer, and general manager of Disney+ for Europe and Africa, starting in 2020.

Also last week, Disney struck a new distribution deal with cable giant Charter Communications that “contemplates Charter’s future distribution of Disney’s streaming services, including Hulu, ESPN+ and the soon-to-be-launched Disney+,” according to a press release issued by Charter.

Disney+ is targeting 60 million to 90 million subs globally by 2024.

New Disney-Charter Deal ‘Contemplates’ Disney+ Access

Chalk up another positive for Disney+: The Walt Disney Co.’s much-hyped new subscription video-on-demand (SVOD) service, set to launch in November, may be available to Charter Communications subscribers.

A new distribution deal between Disney and Charter, announced Aug. 14, calls for the country’s No. 2 cable operator to continue carrying Disney’s TV and ESPN programming to Spectrum TV subscribers.

The deal also “contemplates Charter’s future distribution of Disney’s streaming services, including Hulu, ESPN+ and the soon-to-be-launched Disney+,” according to a press release issued by Charter.

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The deal wouldl help Disney+ in its attempt to compete with established streaming titans Netflix and Amazon.com.

In addition, Spectrum TV will also offer customers access to ESPN’s upcoming ACC Network when it launches Aug. 22.

Under the deal, Spectrum TV will continue to provide its customers widespread access to ABC, Disney Channel, Disney Junior, Disney XD, Freeform, ESPN, ESPN2, ESPN3, ESPNU, ESPNEWS, ESPN Deportes, ESPN Goal Line, ESPN Bases Loaded, SEC Network, Longhorn Network, and the newly acquired networks of FX, FXX, FXM, Fox Life, National Geographic, Nat Geo Wild, Nat Geo Mundo and BabyTV.

“This agreement will allow Spectrum to continue delivering to its customers popular Disney content, makes possible future distribution by Spectrum of Disney streaming services, and will begin an important collaborative effort to address the significant issue of piracy mitigation,” said Tom Montemagno, EVP of programming acquisition for Charter.

Sean Breen, SVP of Disney Media Distribution, added: “Our new agreement with Charter allows us to continue serving Spectrum TV customers with the full value of the Walt Disney Television and ESPN networks, including the newly acquired FX and Nat Geo networks. ACC fans can also rest assured that they will be able to watch their favorite teams on Spectrum, one of the largest distributors across the ACC footprint, when ACC Network launches next week.”

Walt Disney Studios Q1 Operating Income Plummets 63%

Mary Poppins and The Nutcracker proved no match for Marvel superheroes and “Star Wars” as The Walt Disney Co. said first-quarter (ended Dec. 29, 2018) operating income at Walt Disney Studios dropped 63% to $309 million from operating income of $825 million during the previous-year period. Studio revenue fell 27% to $1.8 billion from $2.5 billion a year earlier.

The studio on Feb. 5 said lower operating income was due to a decrease in theatrical distribution results, partially offset by growth in TV/SVOD distribution.

Specifically, Disney’s previous-year results from Star Wars: The Last Jedi, Coco and Thor: Ragnarok dwarfed Mary Poppins Returns and The Nutcracker and the Four Realms in the current year. Box office hit Ralph Breaks the Internet was released in the current second quarter.

CFO Christine McCarthy warned theatrical and home entertainment operating revenue would come up short in the current second quarter in the range of $450 million to $500 million compared to the previous-year period — which was the best Q2 ever for the studio.

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Growth in TV/SVOD distribution was due to the performance of Incredibles 2 and Avengers: Infinity War in the current quarter compared with Cars 3 and Guardians of the Galaxy Vol. 2 in the prior-year period.

Overall, the Walt Disney Co. reported earnings per share of $1.84, down 3% from the previous year, when the company posted EPS of $1.89. Total revenue came in at $15.3 billion, about the same as last year.

The down financials nevertheless beat Wall Street expectations. Analysts were anticipating EPS of $1.55 and revenue of $15.18 billion.

Higher revenue from broadcast and parks — run by former Disney home entertainment chief Bob Chapek — offset the declines at Walt Disney Studios.

 

Disney to Demonstrate DTC Service Disney+ April 11

The Walt Disney Co. will demonstrate its pending direct-to-consumer streaming service Disney+ and offer a first look at some of the original content being created by the company’s TV and film studios exclusively for the service at an investor day presentation April 11, the company announced.

Also, effective for the first quarter of fiscal 2019, the company will begin reporting segment operating results for four segments: media networks; studio entertainment; parks, experiences and consumer products; and direct-to-consumer and international (DTCI), the company reported Jan. 18 in a filing with the SEC. In the Form 8-K, the company also recast financial results for the past three fiscal years to reflect the reorganization of Disney’s business segments. In the fiscal year ended Sept. 29, 2018, recast numbers show the DTCI segment with a loss of $738 million.

“Our top priority is fully leveraging our global brands and great content to create world-class direct-to-consumer entertainment,” said Disney chairman and CEO Robert A. Iger in a statement. “We have the structure and management in place to drive growth in our DTC business, and our acquisition of 21st Century Fox further enhances our ability to deliver significant value to consumers and shareholders.”

“Acquiring BAMTech enabled us to enter the DTC space quickly and effectively, as demonstrated by the success of ESPN+,” Iger said in a statement. “The service surpassed 1 million subscribers in its first five months and continues to grow as it expands its content mix, all of which bodes well for our upcoming launch of Disney+. The ability to connect directly with millions of Disney, Pixar, Marvel, and Star Wars fans creates tremendous opportunities for growth. In addition to leveraging our existing IP in new ways, we’re making significant investments in original content exclusively for Disney+, creating an impressive pipeline of high-quality movies and series we believe will make the streaming service even more compelling for consumers.”

The slate of Disney+ content currently in production includes the first-ever live-action Star Wars series “The Mandalorian”; an original series based on Disney Channel’s “High School Musical”; an animated series based on Pixar’s “Monsters, Inc.” franchise; a new season of the “Star Wars” animated series “Clone Wars”; a live-action version of the animated classic Lady and the Tramp; and original docu-series. A live-action Marvel series starring Tom Hiddleston and a second “Star Wars” series starring Diego Luna are also in development, the company announced.

Marvel’s ‘Avengers: Infinity War’ Home Video Sales Spur Q4 Disney Studio Results

Home entertainment sales of Marvel’s Avengers: Infinity War (physical and digital) helped increase Walt Disney Studios’ fourth-quarter (ended Sept. 30) operating income 64.5% ($378 million) to $596 million from $218 million during the previous-year period. Revenue increased 50% to $2.15 billion from $1.43 billion last year.

Infinity War has sold $90.5 million via 2.7 million combined DVD/Blu-ray Disc units since its Aug. 14 retail debut, according to The-Numbers.com. The title is the sixth best-selling title of the year – but only the fifth best Disney title!

Other significant home entertainment titles included Solo: A Star Wars Story, released Sept. 25, while the prior-year quarter included Beauty and the Beast.

For the year, Black Panther, Stars Wars: The Last Jedi, Coco and Thor: Ragnarok rank among the top-five home entertainment releases in 2018.

“We’re very pleased with our financial performance in fiscal 2018, delivering record revenue, net income and earnings per share,” CEO Bob Igersaid in a statement. “We remain focused on the successful completion and integration of our 21st Century Fox acquisition and the further development of our direct-to-consumer business, including the highly anticipated launch of our Disney-branded streaming service late next year.”

Separately, Iger revealed the pending direct-to-consumer streaming service will be called Disney +, featuring original content from Marvel, Pixar and Lucasfilm.

 

 

Hulu Revamps Management, Company Structure

Looking to shake up its internal management structure, Hulu has hired a new chief technology officer, its first chief data officer and realigned the subscription streaming video platform into four operating segments, among other changes.

Notable in the reorganization is the departure of chief content officer Joe Stillerman and Tim Connolly, SVP of partnerships and distribution. Stillerman had been with Hulu for just a year after joining the company from AMC Networks. Also leaving is Ben Smith, SVP, experience, who is retiring in July.

Hulu is conducting a search for a head of the new content partnerships group and is eliminating the CCO position.

“Ben, Tim and Joel have all played a significant role in getting Hulu to the strong position it is in today. They will forever be a part of Hulu’s success story, and we wish them the very best in their next endeavors,” CEO Randy Freer said in a statement.

The company’s original programming and relationships with creators, producers and studios will now operate as a dedicated business function led by SVP of content, Craig Erwich, who reports to Freer at the company’s Santa Monica, Calif.-based headquarters.

Other business segments include technology & product, “subscriber journey,” advertising, data & analytics. All of Hulu’s shared services functions — finance, legal, corporate communications and talent & organization — will continue operating as usual, reporting directly to Freer.

Hulu hired Jaya Kolhatkar, former SVP, global data and analytics platform for Walmart, as chief data officer. Kolhatkar, who begins July 2, will be responsible for elevating Hulu’s customer intelligence, implementing data governance and pushing the SVOD’s decision making based on data.

Dan Phillips, former COO at TiVo, becomes Hulu’s chief technology officer, responsible for aligning the company’s technical and product strategy. Philipps begins today (June 4).

Chief marketing officer Kelly Campbell assumes responsibility for “subscriber journey,” which includes acquisition, engagement and retention, to viewer experience and research, across all of Hulu’s business operations. In addition, this group will now oversee Hulu’s subscriber partnerships, including its relationships with Spotify and Sprint.

The advertising sales group continues to report to Peter Naylor, SVP of ad sales.

Hulu, which last month topped 20 million subscribers, continues to spend big attempting to bridge the gap with Netflix and Amazon Prime Video.

It 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 original content (“The Handmaid’s Tale,” Marvel’s “Runaways,” “Future Man,” and “The Doozers”) spending skyrockets.

The losses are primarily driven by continued investments in programming and marketing by Hulu’s four corporate parents 21st Century Fox, The Walt Disney Co., Comcast and Time Warner.

Disney Has Lofty Plans for Hulu, Despite SVOD’s Mounting Fiscal Losses

The Walt Disney Co. plans to “fuel” Hulu with original programming from its core brands should its $52.4 billion acquisition of 20th Century Fox be completed, Disney CEO Bob Iger told analysts.

Speaking May 8 on the fiscal call, Iger said the Fox acquisition would give Disney 60% ownership of Hulu (and Hulu Live online TV service) with co-owners Comcast and Time Warner owning 30% and 10%, respectively.

Comcast is reportedly finalizing plans to outbid Disney for Fox, which, if successful, would give the cable giant control of Hulu.

“It is our intention to continue to fuel Hulu with more original programming,” Iger said. “And much of that original programming will come from the assets of both Disney and Fox. Think FX as one example, Fox Searchlight is another.”

Iger said Disney’s plan to rollout a branded SVOD service in 2019 could include other Fox assets such as National Geographic, but would be largely anchored by Disney, Marvel, Pixar and Star Wars content.

“When we announced [our direct-to-consumer initiatives] a year ago, we were not talking about Hulu,” he said. “And again, neither is dependent upon, but stands to benefit from the Fox acquisition.”

Disney’s growing obsession with OTT video and Hulu comes as it watches Netflix and Amazon Prime Video grab global market share, increasingly featuring original content.

“When we were considering the best way to integrate the Fox assets, we asked ourselves how best to organize the company,” Iger said. “And one of the things that we looked at was how some of the new entrants in the marketplace are organized. And you typically find – Netflix is a good example.”

At the same time, as Hulu ups its content profile and subscriber base (20 million), costs escalate.

Disney has guaranteed $113 million of Hulu’s $338 million term loan, which expires in August 2022. Disney is also committed to infusing $450 million in capital contribution to Hulu in 2018, according to a regulatory filing. Through March 31, Disney’s capital contributions totaled $114 million against this commitment.

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 original content (“The Handmaid’s Tale,” “Marvel’s Runaways,” “Future Man,” and “The Doozers”) spending skyrockets.

“The higher losses at Hulu were primarily driven by continued investments in programming and marketing, partially offset by higher subscription and advertising revenue,” said CFO Christine McCarthy.

 

Sky Posts Strong Q3 Fiscal Results

British satellite TV operator Sky – coveted by 21st Century Fox, Disney and maybe Comcast – April 19 reported a 5% increase in third-quarter (ended March 31) revenue to £10.1 billion ($14.2 billion) from £9.6 billion during the previous-year period. Operating income increased 22% to £857 million from £702 million last year.

“It’s been a good quarter for Sky,” CEO Jeremy Darroch, said in a statement.

The pay-TV operator added 70,000 new video subscribers in the U.K. and Ireland, ending the period with 13 million. The service also inked new partnerships with Netflix and music streaming service Spotify for its Sky Q over-the-top video platform.

Sky has another 5.2 million and 4.8 million video subscribers in Germany/Austria and Italy, respectively.

“Against the back drop of a challenging consumer environment, this performance reflects the continual improvement in our broad set of products and services,” Darroch said.

The executive reiterated that Fox’s offer for outstanding ownership of Sky is currently being reviewed by the Competition and Markets Authority. The CMA is due to send its final report to the Secretary of State by May 1, who is expected to give his decision no later than June 13.

In assuage British regulators, Fox has suggested “ringfencing” Sky News from outside corporate (read Fox owner Rupert Murdoch) influence, and/or divesting Sky ownership to Disney.

Disney has a separate offer on the table for select Fox assets, including 20th Century Fox Studios and Sky. Murdoch is keeping Fox News and Fox Sports in the U.S., among other provisions.

In February, Comcast made public its interest in offering an offer for Sky that significantly exceeds Fox’s. The cable giant has yet to act on that.

“Since no firm offer has yet been made by Comcast or any other third party, Sky shareholders have been advised to take no action,” Darroch said.

Hearing on Redbox Motion to Dismiss Disney Lawsuit Postponed

A hearing scheduled for March 5 on a motion by Redbox to dismiss a lawsuit brought against the video rental kiosk operator by the Walt Disney Co. has been postponed for a week, a Redbox spokesperson said.

Disney last November filed suit against Redbox, seeking to prohibit Redbox from selling movie download codes to titles such as like Rogue One: A Star Wars Story and Moana at a discount to what digital copies sell for on Amazon or iTunes.

Disney had argued that the sale of download codes violates copyright law. Disney includes a warning on combo packs that “codes are not for sale or transfer” – a warning underscored in the terms of use, which say the “sale, distribution, purchase, or transfer of digital copy codes … is strictly prohibited.”

On Feb. 20, a federal court in Los Angeles rejected Disney’s motion for a preliminary injunction to stop selling the codes.

The judge ruled that the warning does not constitute a contract restricting what a consumer can do with product purchased at retail.

In a critical finding, Judge Dean Pregerson ruled that “this improper leveraging of Disney’s copyright in the digital content to restrict secondary transfers of physical copies directly implicates and conflicts with public policy enshrined in the Copyright Act, and constitutes copyright misuse.”

The preliminary injunction was granted because the court agreed with Redbox’s contention that Disney was unlikely to prevail on its case.  According to the ruling, “Disney has not demonstrated a likelihood of success on the merits of its contributory copyright infringement claim.”

“From Redbox’s perspective, the court’s decision was a common-sense application of the law of contracts to the unenforceable fine print on the outside of Disney’s combo packs,” Brennan said.

However, the court did rule that “at this stage of proceedings, it appears to the court that the First Sale Doctrine is not applicable to this case” – a critical cog in Redbox’s January countersuit against Disney, in which the kiosk operator maintains Disney digital codes should not be treated any differently than physical discs that it is legally entitled to rent.

The First Sale Doctrine, which video retailers used in the early 1980s to establish their right to rent videocassettes over strong studio opposition, says a copyright owner cannot prohibit a purchaser from reselling a copy of a work, such as DVD.

Disney is the only studio that won’t sell product to Redbox. As a result, Redbox staffers buy Disney DVDs and Blu-ray Discs at retail, and then rent the discs while selling the codes – included in Blu-ray Disc combo packs – separately.