🔰CEO Bob Iger on Disney gaining full control of Hulu: We are 'very pleased' with this

Joining us in a CBC exclusive is Bob Iger, of course, Disney CEO. Good to have you back on, Bob. You know, four hundred and thirty eight million is a lot less than many of your shareholders were at least concerned. I don't know if you were concerned that you'd have to pay. And I'm curious, was that the case? Did you have more money earmarked potentially? And if so, does it give you an opportunity to spend it elsewhere? Well, let me start, David, by saying that this is a business, our streaming business, that lost five billion dollars in the year prior to my coming back. And we're going to earn over one billion this year. So I say, sorry, four billion in the year prior to my coming back. We're going to earn over one billion this year. So we've got a five billion dollar turnaround. And this step is the first big step in the direction of turning this into a real growth business for the company. We were prepared, if necessary, to pay more for this. But the third party appraiser praised it at a price that was closer to our evaluation or the bank that was evaluating this business for us. Had the bank, the third party appraiser, come up with a number that was closer to Comcast, this could have cost us five billion dollars more. So obviously, we're very pleased with this result. But now we're focused on doing what we intended to do once we gain full control of this. And that's basically to put these apps together seamlessly to create an experience for the consumer that's easier to use, easier to buy, to increase engagement, to lower churn, to grow subs and ultimately to consolidate more and to save some money in terms of the operation. So we're very pleased with this result. Yeah, I would imagine you would be given it is, again, far less than perhaps certainly our parent company Comcast was hoping that they would get. Although at the end, it's still almost nine billion dollars for them in terms of the overall stake. You mentioned direct to consumer. Last quarter, which was only a few weeks back, you delivered three hundred and thirty six million in operating income from direct to consumer. You mentioned Hulu now being a part of overall this plan. So what do you do once you own it? What do you actually you know, what is the consumer going to see? Perhaps it's different, Bob, than currently in terms of the offering you're making to them. Well, we've already bundled the apps in a way that is really easy to use with ingesting the Hulu product onto the Disney Plus product. But obviously this is a step in the direction of putting these apps together fully, making basically not only a seamless experience for the consumer, but as I said earlier, essentially a one app purchase. And that's clearly important for us because with a combination of the great quality branded programming on on Disney Plus and with a great value that Hulu provides with not only volume in terms of general entertainment, but quality, this is a great combination. And this is, again, a big step in the direction of us enabling all of this and also turning Hulu into a more global brand as part of the Disney Plus offering. And then in addition to that, we've got ESPN coming with a direct to consumer product toward the end of this year and the end of this fiscal year. And obviously when we do that, we'll put out a great bundle for the consumer, which will enable the consumer to buy all three and have a seamless experience between Disney Plus, Hulu and ESPN. Right as well. Listen, there's been plenty of other news not necessarily related to Disney. Yesterday, though, Warner Brothers Discovery announcing it will split its company. It's not long ago, of course, Comcast also splitting off its cable networks, including our own into a new company called Versant. You know, you and I sat down almost two years ago now in Sun Valley where you'd indicated certainly you were looking closely at the possibility of divesting some of what you called non-core before some of your cable networks. You chose not to, Bob. It's a different direction than Warner Brothers has gone in or Comcast has gone in, and I'm curious as to why. Well, you're right, David, two years ago, soon after I returned to Disney, I put everything on the table and asked the team to evaluate one, whether we should buy Hulu or whether we should sell Hulu, whether we should sell our linear television networks or whether we should hold on to them. And after a pretty lengthy process internally and really taking a long look at what these properties could mean to us long term, we decided that the best course for us to take was to not only hold on to Hulu and buy it in its entirety, but also to hold on to the linear television networks and to integrate them seamlessly with our streaming business. Because what that has enabled us to do is one, aggregate revenue both on the sub fee side and on the advertising side. You know, there is still enough linear television subscribers to generate a significant amount of revenue in both cases, in advertising and in subscription fees. We program them seamlessly. We manage them in one organization. And so there's been great economies of scale in doing that. We also aggregate audiences for marketing purposes. And so the what we've determined is the combination of both is actually a winning combination for us. It's one of the things that's enabled us to turn the streaming business around from a huge loss to profitability. And over the next several years, it will enable us to grow margins significantly on the streaming side. Because, again, the ability to advertise program costs and the ability to essentially aggregate audiences and revenue. So we're pleased with the direction we're going. Look, it's also interesting to us that as many others exit that business, I think it gives us a stronger hand to stay in that business. You know, we're very focused. We will have, interestingly enough, a linear television business that's paired with a streaming business. So when you think about it, these spinoff companies won't have the assets from a streaming perspective that we will have. Now, again, I think that's right. They're separating out. Yeah, they're separating out to get a higher multiple perhaps on what they call now the growth part of their business. I mean, one differentiator between you and Warner Brothers, though, is you have ABC, you do have a network. Interestingly, Comcast chose not to include NBC with Versant. You know, I wonder because at the time you were referring to our conversation a couple of years back, it seemed that even ABC was you were considering potentially saying so long to. Is there a lot more value in a broadcast network perhaps that you'd perceived previously? Well, I think there's a lot more value in a broadcast network, again, if it's paired very, very seamlessly with a streaming business. And when you think about our core networks, obviously ESPN is a big one that will be connected, obviously, fully with ESPN's digital offering. Disney Channel is connected seamlessly with Disney Plus. FX and ABC have fed Hulu programming very effectively. And now when you think about all four and we also have Nat Geo, which does the same with Disney Plus. When you think about those five networks and how they are programmed across linear and streaming, you've got a business that actually provides us an opportunity to not only grow, but to grow margins in the process as well. So, again, we like the direction we're going. We like the fact that we're one of the few that is doing this because I think it sets us up to be even more competitive in a marketplace that's becoming even more fragmented.