Comcast in Talks with Disney to Sell Hulu Stake

Comcast reportedly is in talks with Disney to sell its 30% stake in Hulu, which includes online television platform Hulu with Live TV, according to CNBC, which cited internal sources.

CNBC is owned by Comcast business unit NBC Universal.

Disney currently owns 60% of the 12-year-old streaming service with 25 million subscribers after it acquired 20thCentury Fox. AT&T’s WarnerMedia unit just sold its 10% stake back to Hulu for $1.43 billion.

The discussions, which CNBC said are in the preliminary stage, were revealed hours after Comcast chairman/CEO Brian Roberts told investors the cable giant enjoyed owning a large stake of a Disney asset.

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“On Hulu, the relationship with NBC, it’s very much in everybody’s interest to maintain,” Roberts said on the all. “And we have no new news today on it, other than it’s really valuable. And we’re really glad we own a large piece of it.”

At the same time, with Disney firmly in control of Hulu and Comcast heretofore reluctant to move too far away from the pay-TV business model, selling its stake in an over-the-top business could help Comcast alleviate more than $100 billion in corporate debt following the $39 billion Sky acquisition.

Comcast reportedly could get $4.5 billion for its stake in Hulu, which lost $1.5 billion in 2018. Disney doesn’t expect Hulu to become profitable until 2024 – and only after possible international expansion.

At the same time, NBC Universal CEO Steve Burke remains skeptical of OTT business model, including Netflix.

“To be worth $150 billion, someday you’ve got to make at least $10 billion in EBITDA,” Burke told CNBC last year. “There’s at least a chance Netflix never makes that.”

Comcast, which only recently incorporated direct access to Netflix for its Xfinity pay-TV subscribers, plans to launch an OTT service for Xfinity in 2020.

 

Viacom Takes Paramount+ Streaming Service to Latin America; Inks CNN Content Deal with Pluto TV

Viacom International Media Networks is set to expand the Paramount+ streaming video platform to Latin America.

The SVOD service, which first launched in Scandinavia (in response to HBO Nordics in 2017 and later in Central and Eastern Europe – known as Paramount Play), will become available May 1 in Brazil in a partnership with telecom NET, followed by wider distribution through a mobile deal with America Movil.

Paramount+ affords Viacom and Paramount Pictures international streaming distribution of more than 150 movies and original TV shows, including “Yellowstone,” starring Kevin Costner, “The Handmaids’ Tale” (available exclusively on Hulu in the U.S.), in addition to branded content from MTV, Comedy Central, Nickelodeon and Nick Jr.

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“By forging partnerships with the world’s leading operators and distributors, we are able to bring Viacom’s premium content to new global audiences,” David Lynn, president and CEO of Viacom International Media Networks, said in a media statement. “As the media landscape continues to evolve, we will aggressively innovate to expand our partner offerings, including Paramount+, across our massive global footprint.”

Indeed, while Paramount+ represents Viacom’s aggressive strategy to close the digital divide with rival studios, following the recent purchase of Pluto TV, Viacom is fortifying the ad-supported VOD platform with proprietary and third-party content.

Pluto TV just announced a new channel launch featuring content from WarnerMedia’s CNN – which itself is planning an OTT video product in 2020.

“At a time when news cycles are never-ending, in a world that is constantly evolving, CNN’s coveted daily reporting and in-depth features are perfect for our audience to be informed, with immediacy, accuracy and ease,” Amy Kuessner, SVP of content partnerships at Pluto TV, said in a statement. “Pluto TV’s mission to ‘entertain the planet’ also means informing the planet of what is going on in the world, and there is no better partner than the most trusted name in news.”

DTR: Netflix’s North American Market Share to Fall by 2024

Despite adding 10 million subscribers in the first quarter (ended March 31), and 31 million subs in 2018, Netflix’s market share in North America is projected to decline from 37% to 25% by 2024, according to new data from Digital TV Research.

The London-based research firm based the decline in part on pending OTT services launches from Disney, Apple, WarnerMedia and Comcast. The report contends the number of SVOD subscriptions (movies, linear channels and TV episodes) — excluding platforms such as sports services — in North America increasing by 110 million to 270 million from 160 million in 2018.

The report said the data represents gross subscriptions as many households include more than one SVOD platform.

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Digital TV Research forecasts that 77.8% of TV households (94 million) will subscribe to at least one SVOD platform by 2024. The average SVOD household will pay for nearly three (2.89) SVOD subscriptions.

This compares to 70% of TV households (84 million) TV households subscribing to at least one SVOD platform by end-2018. The average SVOD subscriber paid for nearly two (1.91) SVOD platforms at end-2018.

“Several high profile SVOD launches are imminent,” Simon Murray, principal analyst at Digital TV Research, said in a statement. “We expect that Disney+ will have 25 million U.S. subscribers by 2024. Apple TV+’s growth will be more modest at 8 million.”

‘Game of Thrones’ Final Season Premiere Tops Largest Streaming Night for HBO Now

The April 14 premiere of the eighth and final season of “Game of Thrones” generated record viewership for HBO, including standalone subscription streaming service HBO Now. The premiere accounted for largest night of streaming activity ever for HBO Now.

The previous streaming record was set in 2014 by the season one finale of “True Detective,” starring Matthew McConaughey and Woody Harrelson, which temporarily crashed TV Everywhere app, HBO Go.

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WarnerMedia said a record 17.4 million people watched the episode across all distribution formats, including pay-TV. The tally exceeded by more than 1 million the previous series high of 16.9 million viewers for the season seven finale.

HBO Now saw a jump of about 50% in viewing when compared to last season’s finale and nearly doubled (97%) when compared to the seventh-season premiere.

The 9 p.m. airing was viewed by 11.8 million viewers, surpassing the season seven premiere of 10.1 million viewers and slightly behind the season seven finale of 12.1 million viewers.

“Game of Thrones” season seven went on to average 32.8 million viewers per episode.

It’s a Netflix World. Hollywood is Just Living in It

Netflix added almost 10 million new subscribers in its most-recent fiscal period, nearly topping 150 million subscribers globally. The SVOD pioneer added 31 million subs in 2018.

The sub growth ended — for  the moment — naysayer illusions the SVOD giant had become a cash cow — economic shorthand for a business generating plenty of cash but waning growth potential.

More importantly, critics contend Netflix is beholden to Hollywood studios for content, the same studios now readying their own rival SVOD platforms to compete with Netflix.

With Disney, WarnerMedia and NBC Universal reportedly set to pull back content license agreements with Netflix by 2020 — if not sooner — scuttlebutt suggests the streamer has become vulnerable and overly dependent upon internal content production.

“The modern media company must develop extensive direct-to-consumer relationships,” Randall Stephenson, CEO of WarnerMedia parent AT&T, said on the telecom’s last fiscal call. “We think pure wholesale business models for media companies will be really tough to sustain over time.”

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Indeed, Disney, which is majority owner of Hulu and online TV service, Hulu with Live TV, will launch proprietary SVOD service Disney+ in November — fortified by content (i.e. Disney, Pixar, Marvel and Star Wars) originally earmarked for Netflix.

To their credit, Netflix brass Reed Hastings and Ted Sarandos welcome the competition, while dismissing the threat. As well they should.

“We’ve been competing with 500 channels of cable and penetrated nearly every household in the world for a long time,” Sarandos said in March. “[Now], it’s the same stable of competitors; just very late to the game.”

Disney+ isn’t set to launch for another seven months. WarnerMedia and Comcast aren’t bowing OTT platforms until 2020. An eternity in the rapidly evolving digital distribution ecosystem.

While Disney+ will be priced below Netflix’s basic subscription plan, its content offering will pale in size to Netflix. The platform is also not projected to be profitable until 2024.

That’s five years of sustained losses. Hulu may have 25 million subs, but it remains a fiscal black hole to its corporate owners (which includes Comcast) since launching in 2007.

Disney’s Direct-to-Consumer & International business segment, which operates Hulu and Disney+, lost nearly $800 million in 2018. Disney expects to have 60 million to 90 million subscribers by 2024, less than half of Netflix’s projected base.

To put it in perspective: Netflix’s sub growth (over 90 days) this year topped the combined subscriber count for CBS All Access and Showtime OTT at the end of 2018 — by 20%.

Netflix’s conservative estimate of 5 million new subs in Q2 equaled HBO Now’s total membership — three years after its 2015 launch.

In fact, many Netflix rivals have resorted to sacrificing revenue and user data in hopes of generating subscribers through Amazon Channels, the ecommerce giant’s platform marketing third-party OTT services to Prime members.

It’s an opportunistic business model Apple is replicating with Apple TV+.

“All of the media companies will have to become more consumer-oriented,” Jessica Reif Ehrlich, media analyst for Bank of America Merrill Lynch, said in a research note last summer.

Translation: Media companies have to become more Netflix-oriented.

Ted Sarandos: Most-Watched Netflix Shows are Originals

Much attention has been given to major media companies such as Disney, NBC Universal and WarnerMedia pulling back content licensing to Netflix for their own branded over-the-top video platforms — and what impact that would have on the SVOD juggernaut.

Not much, according to CCO Ted Sarandos, who says the streaming service has anticipated such changing market dynamics for the past seven years.

Speaking on the April 16 fiscal webcast, Sarandos said CEO Reed Hastings and others long ago concluded Netflix’s future required streaming original scripted series, unscripted series, feature films, documentaries, standup comedy and children’s programming.

“And that’s what we set out to do,” he said.

Reed Hastings and Ted Sarandos

Longtime Netflix bear Michael Pachter, media analyst with Wedbush Securities in Los Angeles, contends about 80% Netflix’s content license deals with WarnerMedia (“Friends”) and NBC Universal (“The Office”) expire in 2020.

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Disney’s exclusive feature film agreement ends this year. Netflix’s recently cancelled Marvel Defenders Universe series, which included “Daredevil,” “Jessica Jones,” “The Punisher,” “Luke Cage” and “Iron Fist.”

“Netflix can thrive in the face of new [OTT video] competition only if it has the content to compete,” Pachter wrote in an April 17 note, aptly named, “Netflix: 57 channels (and Nothin’ On).”

Hastings characterizes any comeback strategy aimed at filling in exiting studio content with similar programming as “very minimalist.”

“You look at [global nature series] “Our Planet,” that’s not filling in for anything else, that’s setting a bold new vision of what programming can be,” he said.

Sarandos said Netflix original interactive series “You vs. Wild” has been streamed by about 25 million households in its first 28 days of release. Pending releases include Klaus, Netflix’s first animated feature film from veteran animator Sergio Pablos, and “Green Eggs and Ham,” an Ellen DeGeneres-produced 13-episode animated series.

“It’s pushing storytelling forward, which I think we’re trying,” he said.

The longtime content executive contends most TV programming is largely interchangeable. Netflix’s focus, according to Sarandos, is original programming (such as India’s “Sacred Games,” and “Love Per Square Foot,”) targeting local audiences that can appeal globally as well.

“If you look at our Top 10 most-watched shows on Netflix, they’re all Netflix original brands,” he said, adding that only four TV series among the service’s Top 25 have at least one season available elsewhere.

“It’s hard to imagine a couple of years ago when Fox said, ‘sunset all of their second-window content on Netflix off of the service to focus on their own efforts,’ and we’ve seen how we’ve been doing since 2017, so we’re pretty happy about it,” Sarandos said.

So is Wall Street, which lifted Netflix shares nearly 3% in April 17 pre-market trading.

Poll: Netflix ‘Integral Part’ of People’s Lives

Heading into Netflix’s first-quarter (ended March 31) fiscal results release, new research from The Harris Poll found that 86% of respondents stream the SVOD pioneer, followed by Hulu (53%) and Amazon Prime Video (49%).

The survey, commissioned by ad-exchange OpenX, found that despite Netflix’s recent price hike, the average amount subscribers would pay monthly for a single OTT service subscription is $22 — which is 37.5% more than Netflix’s most-expensive $15.99 plan.

Indeed, the poll found Netflix has become an integral part of people’s lives, with half of users also subscribing to Hulu (52%), Prime Video (54%), YouTube TV (29%) and HBO Now (24%).

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Notably, 31% of respondents would watch ads on Netflix for a lower monthly subscription price; while 24% would watch ads on Netflix, but only if the service was free.

“It will be telling to see if Netflix’s growth numbers are adversely impacted by the price hike; especially now that Disney+ will be significantly undercutting Netflix on price,” Dallas Lawrence, chief brand officer at OpenX, said in a statement.“According to our data, Netflix users are too loyal to leave over a few dollars cost increase.”

Indeed, the poll found Netflix replaces the need for cable/satellite TV for about half (47%) of respondents; with 46% planning to keep their cable/satellite TV package in addition to Netflix.

“Recent announcements by Apple and Disney signify Netflix’s reign as the undisputed king of streaming services may be coming to an end,” said Lawrence. “It’s early in this massive shift of consumer attention from linear TV to OTT to make any calls just yet. As the percentage of Americans who stream content gets closer to 100% [from current 50%], there’s still growth potential for Netflix in the U.S.”

On Eve of Financials, Netflix Naysayers Out in Force

NEWS ANALYSIS — With Netflix reporting first-quarter fiscal results after the market close today, some pundits suggest the subscription streaming video behemoth has suddenly become vulnerable to a host of challenges — both real and imagined.

Disney is set to launch a branded SVOD service in November with content previously earmarked for Netflix, and WarnerMedia and NBC Universal are pulling back licensed programming (“The Office,” “Friends” and “Grey’s Anatomy”) as well for proprietary services.

As a result, scuttlebutt suggests Netflix is scrambling to fill the void.

“Just throwing tens of billions at developing more original TV series and movies may not be enough on its own to keep the company growing domestically at the rate needed to reach its goal of 90 million US subscribers,” Helen Back with research firm “Kill the Cable Bill” wrote in a post.

Separately, online pundit “The Entertainment Oracle” contends Netflix has a “Game of Thrones” problem that has nothing to do with the fact the ratings hit resides on rival streaming service HBO Now.

The argument being that the high profile fantasy series — currently airing/streaming its last season — continues to fuel old-school water cooler buzz through weekly episodic programming rather than subscribing to Netflix’s “batch” distribution model.

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‘They are losing that weekly buzz that has helped ‘Thrones’ rise to new [viewership] levels,” wrote The Oracle.

The pundit suggests that adhering to weekly programming has helped Amazon Prime Video and Hulu secure industry awards, while apparently ignoring Netflix’s binge/Emmy/Golden Globes success with “House of Cards,” “Orange Is the New Black,” “The Square,” “Unbreakable Kimmy Schmidt,” “Grace and Frankie” and “Bloodline,” among others.

“Netflix does have its big hits and its instant-conversation starters, but by remaining so steadfast in its “all-at-once model”, it’s hurting the long-term possibilities for shareholders and that’s expanding out into the marketplace,” wrote The Oracle.

What’s ignored is that HBO Now (with more than 5 million subs) remains tethered to Amazon Channels to drive sub growth while Netflix has grown domestic subs organically to the tune of 5.4 million net additions annually over the past five years.

Netflix is projected to top 90 million domestic subs by 2024.

From ‘Kill the Cable’ research

More importantly, driving that sub growth is original programming, according to Netflix management.

“I’d say the vast majority of the content that’s watched on Netflix are our original content brands,” CCO Ted Sarandos said on the Q4 fiscal webcast.

Sarandos added that ranking episodic programs by individual seasons on Netflix is “dominated primarily by our original content brands.”

In addition, unscripted programing now accounts for more than 50% of viewer hours in the genre on Netflix, according to CEO Reed Hastings.

Impressively, Netflix says domestic subscribers stream about 100 million hours of content each day, or 10% of the 1 billion hours of daily TV consumption nationwide.

Hastings said Netflix has withstood competitive threats in the past and would do as well going forward. The executive also said he would subscribe to Disney+ when it launches.

“What we have to do is not get distracted,” Hastings said on the Q4 call. “We’ve got a path ahead, everyone else in streaming is trying to find one.”

Hulu Buys Back AT&T’s Minority Stake for $1.43 Billion

As expected, AT&T has sold its minority stake in Hulu back to the streaming video joint venture, according to a joint press release from AT&T and Hulu April 15.

The deal leaves the Walt Disney Co. and Comcast as owners of the SVOD and online TV service, Hulu with Live TV.

The transaction valued Hulu at $15 billion, with AT&T’s 9.5% interest valued at $1.43 billion, according to the joint press release. The transaction did not require any governmental or other third-party approvals and was simultaneously signed and closed, according to the release.

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AT&T will use proceeds from this transaction, along with additional planned sales of non-core assets, to reduce its debt, according to the release.

“We thank AT&T for their support and investment over the past two years and look forward to collaboration in the future. WarnerMedia will remain a valued partner to Hulu for years to come as we offer customers the best of TV, live and on demand, all in one place,” Hulu CEO Randy Freer said in a statement.

The transaction comes less than three years after Time Warner acquired the 10% stake in Hulu for $583 million, which at the time valued the SVOD service at $5.8 billion.

After AT&T acquired Time Warner for $85.4 billion, the telecom was left with about $180 billion in debt. The Hulu asset sale is part of management’s plans to reduce debt by $12 billion in 2019, on top of the $9 billion cut last year.

 

 

 

WarnerMedia CEO John Stankey Blasts HBO Europe Sale Speculation

Following AT&T’s $85 billion acquisition of Time Warner, the company was left with more than $170 billion in debt. Senior executives have publicly stated that reducing  the company’s debt load by $20 billion is a primary goal in 2019.

That apparently does not include selling off HBO operations in Europe.

WarnerMedia CEO John Stankey has denied a Financial Times report suggesting the unit responsible for “Game of Thrones” and other programming was being sold.

HBO Europe has about 10 million subscribers across Scandinavia, Spain and Poland.

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“We normally do not comment on speculation, but when a news outlet is advised that their reporting is factually incorrect and report it anyway, we feel compelled to set the record straight,” Stankey said in a statement. “There is no truth whatsoever to the Financial Times’ story saying AT&T is or has considered selling HBO Europe. It’s completely baseless and inaccurate. HBO Europe is a valuable asset for our growth plans in Europe.”

Regardless, HBO has seen high-level staffing changes, including the departures of longtime CEO Richard Plepler, chief digital officer Diane Tryneski, chief revenue officer Simon Sutton, Kary Antholis, president of HBO miniseries and Cinemax programming, Rebekka Rockafeller, SVP of digital products, and Gilman Wong, VP of digital products and chief architect.

Earlier this year, AT&T sold office space in Manhattan, N.Y. in a deal reported to top $2 billion.

WarnerMedia reportedly is leasing back the 1.5 million square feet of office space at 30 Hudson Yards, which includes an observation deck on the 100thfloor — the highest in the Western Hemisphere.