Disney's Iger mulls Hulu's fate in 'very tricky' streaming space
Michael Loccisano

The fate of streaming strategy was foremost as Walt Disney (NYSE:DIS) chief Bob Iger took center stage speaking to investors - and what will happen to key asset Hulu isn't much clearer just yet.
"I am extremely bullish on some of our streaming prospects, notably Disney+, which grew to such a meteoric rate," Iger said at the Morgan Stanley investor conference, saying there's still more to figure out on attracting subscribers, managing skyrocketing content costs and sorting out a pricing strategy.
But Hulu - which Disney currently co-owns with minority partner Comcast (CMCSA) - is a "different set of circumstances."
Disney owns two-thirds of Hulu to Comcast's one-third, and they have a deal by which Disney has an option to buy the remaining one-third in early 2024 at a price guaranteeing a Hulu valuation of $27.5B.
But Disney won't make any hasty decisions ahead of next spring, as Iger says it's a "tricky" period of time.
"What all the different companies that are in streaming have been saying: Every one of them is going to be highly profitable in a couple of years, and grow subs by the tens of millions. It can't possibly happen," Iger said.
"There are six or seven basically well-funded, aggressive streaming businesses out there all seeking the same subscribers, in many cases competing for the same content. Not everybody's going to win," he said.
He's studying the business very carefully, he said. Hulu's a good platform with very strong original programming, and a very attractive platform for advertisers, which has grown in importance: "It's already proven to be valuable for them and advertising has proven to be valuable for us."
"But the environment is very, very tricky right now and before we make any big decisions about our level of investment or commitment to that business, we want to understand where it could go," Iger said. "The whole streaming business - other than Netflix (NFLX), which is relatively mature - it's a nascent business for most of us."
Turning to the recent signs of company strength - the Parks division that's recently generated all the profit - Iger noted "It's proved how resilient it is. It's proven that before, by the way, whether it was the economic downturn of '08-'09 or the effects of the terrorist attacks of 2001; it bounced back really well post-pandemic and not just in the United States but globally."
The importance of Parks meant focusing on one key change when he returned after the ouster of his successor Bob Chapek.
"I've always believed that Disney was a brand that needed to be accessible, and I think that in our zeal to grow profits, we may have been a little bit too aggressive about some of our pricing," he said. "And I think there's a way to continue to grow that business but be smarter about how we price, so that we maintain that brand value of accessibility, and we took certain steps when I came back to do just that. And they resonated extremely well with consumers."
And speaking of his comeback, among his key priorities on what will be a time-flies two-year tenure back in the CEO spot is who will replace him.
"Succession is pretty much at the top of the list, between me and the board," Iger said.
Coming back to the CEO job was an interesting experience because "it was clear that the company needed to be stabilized. It was clear that the reorganization was necessary because of the disconnect ... between spending and revenue generation and marketing. And it was also clear that we had to come to grips with our cost structure for a variety of reasons."
"And we've done all of that already. We have stability, we have reorganization, we have truly aggressive cost cutting efforts. Now it's about getting our content pipeline right," he said.
The conversations with the board and its special committee have been great, Iger said, "And I'm confident that we'll identify the right successor at the right time."