As the clock ticks into autumn this post-Emmys week, it brings television’s New Fall Season, traditionally featuring splashy new shows, a Nielsen viewership reset, billions of dollars in upfront ad revenues and an anything’s-possible optimism usually seen most ardently among fans of crummy sports teams.
Except now we’re in the New, New Fall TV Season, where big shifts in streaming likely will wash over the business’s more traditional precincts.
My friend and colleague Alan Wolk does a good job surveying the 1,000 Reasons for Angst in traditional TV, from diminishing economic prospects for creatives to the uncertain future of affiliates to, oh yeah, whether the broadcast networks can still make money. True, the puckish lads at LightShed Partners are calling it a “death spiral,” but hope abides for a late-life revival.
Meanwhile, streaming is entering what some would call its awkward adolescent stage. Yes, the sector is still growing overall, especially internationally, despite Netflix’s spring rumpus. The resetting of Wall Street expectations hasn’t been fun, but the shift to streaming hasn't stopping, either.
Is streaming distribution as lucrative as the business it’s replacing? I think yes, sooner than later, once services and advertisers figure out how to optimize its possibilities.
That said, some companies (cough, Warner Bros. Discovery) must cling to whatever is generating immediate cash until they can merge with someone again. Survival mode includes sifting through the guttering embers of theatrical exhibition, “arms dealer” licensing and basic cable for a few live coals to warm the quarterly reports. That’s not exactly future-forward.
Others are positioning for coming industry consolidation in more subtle fashion. Nowhere is this more evident than the sudden deep love expressed publicly by both Disney and Comcast executives for Hulu, one of the oldest, biggest and most-watched U.S. streaming services.
The two companies have been dancing around Hulu’s future for at least five years now, including a formal 2019 agreement to make a final sale of Comcast’s one-third share to Disney by 2024 at a minimum enterprise value of at least $27.5 billion.
All of a sudden, both companies say they love Hulu, and want to buy it. But somehow, they still just can’t quite make it happen. Crazy!
That likely comes down to wildly divergent assessments of Hulu’s market value and future use. Comcast might just think that a service that is consistently one of the most popular, widely carried, and frequently watched services in the U.S. market is worth more than a mere $27.5 billion. And did I say it was profitable(!)?
Reports suggest Comcast’s estimation of Hulu’s value might top $80 billion. After all, a profitable(!) streaming service with 46.2 million high-ARPU U.S. subscribers and an exceedingly well-developed advertising business usually isn’t cheap, even in this market.
Disney has studiously avoided doing anything to make Hulu more valuable, especially beyond the United States, favoring Hotstar for its international, non-Disney Plus expansion. Back home, Dancing With the Stars is moving after 17 years as an ABC stalwart to … Disney Plus, which is not Hulu.
It’s hard not to read that and other Disney strategies (Deadpool on Disney Plus, anyone?) as a calculated effort to go low and slow with Hulu, if not actively undermine its value ahead of an eventual buyout.
Meanwhile, after hemorrhaging billions of dollars on sports rights and shows that few have watched, Comcast is finally giving people more reasons to stream Peacock. Most notably, it’s taking back new episodes of the NBC shows it streams next-day on Hulu and putting them on Peacock instead.
Now, big names such as Saturday Night Live and daytime institution Days of Our Lives, newer hits such as La Brea, and the season’s big debut, a reboot of Quantum Leap, won’t be on Hulu anymore.
Will fans make the pilgrimage to Peacock to watch whoever is left in the overhauled SNL cast? Will fans of Dick Wolf’s endlessly recursive Law & Order and Chicago franchises notice that Hulu only has old episodes?
And what does the shift mean for NBC’s newer shows? Will last year’s hit, La Brea, suddenly discover a giant hole in its viewership as big as the one at the center of the show? And will fans stumble across the new Quantum Leap on the big bird, or end up in a time warp of indifference?
It’s all a big bet, but to be frank, Comcast doesn’t have much to lose here, beyond some significant short-term ad revenue and fan discovery opportunities. But omelette makers gotta break those eggs if they want to eat.
Certainly, Comcast needs to do something to further transform its operations after a couple of years of audience indifference toward Peacock.
Further growth in Comcast’s transformation into a broadband-first company is largely done, while the MVPD business continues to erode at a very uncomfortable rate. And as much as Brian Roberts is itching to make a big deal, even talking with game publisher Electronic Arts recently, another major acquisition seems unlikely to pass regulatory muster.
“Comcast’s vertical integration works against it regulatory-wise as it seeks acquisitions and breaking apart the company will only enable transformative transactions if Comcast chairman and CEO Brian Roberts is willing to cede his family’s voting power (similar to the choice John Malone made to save Discovery, enabling the Warner Bros. Discovery merger),” LightShed wrote in a recent analysis.
“With no meaningful synergy between Comcast/Sky/NBCU beyond the balance sheet strength of the combined entity, breaking up Comcast makes strategic logic if there are obvious merger partners for the pieces — none of which are obvious right now without Roberts ceding control,” LightShed added.
Comcast’s Sky unit has partnered with Paramount Global’s streaming services in Europe, and with fellow cabler Charter Communcations to get its prized Flex platform in more U.S. homes. But partners aren’t the same as subsidiaries, and neither deal shifts Comcast’s long-term trajectory.
Meanwhile, the future of Hulu will remain in limbo, with everyone talking about how much they love it, even as they starve it of new shows until a deal is done.
It’s all going to make for a very complex New, New Fall Season for Hulu, Peacock, their corporate siblings and parent companies. Enjoy, everybody. ▪️
