Later tonight, Bob Iger will host a dinner party at his Brentwood home to say thanks and so long to friends and colleagues, one of the many stops on a farewell tour that began when he stepped down as chief executive of Disney in February 2020 and will finally end when he steps down as executive chairman and leaves the company at the end of January 2022. (Yes, Iger is staying on one month longer than Disney previously announced, per sources familiar with the timeline.)
C.E.O. Bob Chapek, who has seized the reins at Disney a little faster and more aggressively than Iger may have liked, will also be in attendance, along with his direct reports. Depending on the tone and tenor of the evening, and the seating chart, it’s conceivable that the conversation could turn to the question currently transfixing Chapek and his colleagues: how to grow Disney+. The streamer, which had a robust launch and rapid rise thanks to its inescapable appeal for families and Marvel/Star Wars superfans, is now starting to plateau at around 118 million subscribers, only 72 million or so of whom are paying full freight. Forty percent of subscriptions come from Disney+ Hotstar in India, which has dragged Disney’s average revenue per subscriber down to just $4.12.
Families and superfans are an extremely loyal audience, but the slowdown suggests they’re also a limited constituency. As I noted last week, Disney executives are now in heated debate over how best to grow the streaming subscriber base. One side argues that Disney should broaden the inventory of Disney+ content to include programs targeting adults who don’t care about Iron Man or Incredibles 2. The other side believes that Disney+ is sacrosanct, and fears that mixing in too much adult-tailored content would dilute or muddy a pristine crown jewel.
As such, there is a great deal of confusion within Disney’s creative teams over what qualifies as Disney+ content. In a new piece detailing Disney’s current bureaucratic mess, The Information’s Jessica Toonkel noted that “projects that spark questions about whether they’re a good fit for Disney+ get bogged down by repeated meetings.” (The piece is a must read for Burbank kremlinologists.)
So, will Chapek expand the Disney+ aperture or focus on feeding the core audience? The answer, according to a number of well-connected Hollywood executives I surveyed this week, is both, and he will get there via Hulu. Yes, Hulu, the undifferentiated streaming brand where original programming is currently such a low priority that the man responsible for it, Craig Erwich, splits his duties also running ABC Entertainment.
To date, Disney has been slow to invest in Hulu because they still have to buy the 33 percent of the company that they don’t own from Comcast, which they can’t do until 2024. It’s a Gordian knot: the more valuable Hulu gets, the more they’ll have to pay for it. This is why they put the kibosh on plans to take Hulu global last year.
But in the long run, Hulu is the vehicle Disney needs to expand its audience beyond families and superfans while keeping the Disney+ brand intact. If and when it becomes a success, Chapek will have the opportunity to merge Disney+ and Hulu, making them a single service rather than two services in a bundle that also includes ESPN+ (which, as I’ve reported, may eventually be spun off). At that point, the all-important Disney+ subscriber number will increase dramatically, and may even reach the 230-260 million target that Disney hopes to achieve in three years.
Chapek is already starting to make that investment. A source familiar with Disney’s roadmap says that Chapek plans to budget up to $7 billion annually for Hulu content—a mind-boggling increase from previous annual budgets of $2-$3 billion that would put Hulu spending almost as high as the $8-to-$9 billion that Disney plans to spend on Disney+ content in 2024. (Disney communications chief Zenia Mucha did not respond to a request for comment on that.)
The investment in Hulu is likely to reframe how Hollywood judges Chapek as a creative force at Disney. Chapek came into the C.E.O. role from the Parks department with a chip on his shoulder and enormous shoes to fill. Iger, after all, was a legendary manager of creative talent and architect of creative I.P. When Chapek botched Disney’s high-profile legal battle with Scarlett Johansson over her Black Widow compensation, Hollywood insiders took that as a troubling sign. Iger, these people say, never would have let a messy internal dispute become so public. Many in Hollywood have also concluded, quite prematurely, that Chapek is too data-driven to ever match Iger’s creative chops.
The truth is that it’s far too soon to tell, because we haven’t seen the content he’s greenlit. But when the time comes to measure Chapek’s creative record, I’m willing to bet we will judge him as much for what he’s done with adult-oriented programming on Hulu as for the Marvel and Star Wars spin-offs he’s added to Disney+. When that time comes, likely in the latter half of next year, Bob Iger will be long gone, and Disney will belong entirely to Bob Chapek.
MSNBC’S Joe Scarborough Problem
In New York, NBCUniversal chief Jeff Shell and his news deputy Cesar Conde continue to wrestle with their own existential crisis: What to do with an MSNBC that doesn’t include Rachel Maddow in primetime? Since the announcement of the blockbuster overall deal that will also serve to sunset The Rachel Maddow Show, the cable news network has also lost Brian Williams, which doesn’t make matters any easier.
The consensus among the smartest (and impartial) media executives I’ve spoken to is that MSNBC is completely screwed, though the word they most often use starts with an “F.” The company paid Maddow $30 million to stop doing her nightly show, and they have no one on the bench who is nearly as popular or influential. In lieu of any better option, the best available plan is to groom Nicolle Wallace for primetime, as I reported in September. Meanwhile, we have yet to see any evidence of a strategy at MSNBC other than playing the same game with lesser talent.
If you thought things couldn’t get worse for MSNBC, I’d like to introduce you to Joe Scarborough: the last remaining household name at MSNBC and someone who, in light of Maddow’s most recent payday, is now pursuing his own dramatic pay raise, according to sources familiar with the matter. Two sources close to Scarborough say he wants “$30 million plus $1″—in part because he wants to be the highest paid talent at MSNBC. Before you raise your voice to protest, given that Scarborough does not have nearly the same following as Maddow, I will remind you that at a Maddow-less MSNBC, a talent like Scarborough has all the leverage. I will also add that he is represented by Ari Emanuel and Mark Shapiro, the ruthless agents who negotiated Maddow’s deal and more or less have a stranglehold on MSNBC.
Scarborough and co-host/wife Mika Brzezinski are under contract for at least another year, but contracts don’t mean all that much when you have talent that’s threatening to walk. They can be torn up and rewritten. And so in the months ahead, Shell and Conde may be forced once again to pony up tens of millions to keep their talent from walking out the door.
What I’m Reading…
James Andrew Miller on the Big Revelations in His HBO Book, Tinderbox:
“The investigative reporter discusses his new book chronicling the network’s history, including its biggest programming mistake, why ‘Lovecraft Country’ was really canceled and whether ‘Game of Thrones’ could have had a ninth season,” by THR‘s James Hibberd.
Jeff Bewkes Lashes Out at AT&T in Coming Book:
“Former Time Warner boss says he didn’t think AT&T ‘would go to such a level of malpractice’ when he agreed to sell to the media giant,” by WSJ’s Joe Flint.
Netflix’s New Love Language: Hello, Engagement!
“Netflix is finally, subtly lifting the veil on its ultra secretive streaming data—in a way that benefits Netflix, of course,” by Puck’s Matt Belloni.