Michael Nathanson of MoffettNathanson (MN) says that while it should be obvious by Disney’ stock price, weak subscriber data, and what he says are the recent inconsistent management comments about Disney’s streaming strategy, that the market has largely written off any optimism about where Disney’s DTC operations can go.

Nathanson says he understands the market’s predicament – and cites concerns over the Parks division and the future of ESPN – but believes there is a much better opportunity here than meets the eye which he reveals in a report on Disney’s current status.

“We have used proprietary data from Antenna, a measurement and analytics company purpose-built for brands that need to understand the growing, complex world of consumer purchase behaviour, to identify the optimal path forward,” said Nathanson

MN argues that one Disney bundle that includes content from Hulu, Disney+, and ESPN+ will deliver enough premium content to reduce churn, aggregate engagement, and generate substantial non-programming cost savings.

Nathanson points out that current churn for the Disney bundle is now under Netflix’s churn and roughly 3x lower than the rest of the industry.

The firm quotes Disney’s own subscriber disclosure snapshots, which states:

· At April 1st 2023, there were 20 million and 1.4 million subscribers to three-service and two-service multi-product offerings, respectively.

· At December 31st 2022, there were 19.6 million and 1.2 million subscribers to three-service and two-service multi-product offerings, respectively.

· At April 2nd 2022, there were 16.8 million and 0.2 million subscribers to three-service and two-service multi-product offerings, respectively.

MN says it believes that Disney would benefit from significant cost reductions in the combination of non-programming activities at Hulu, Disney+ and ESPN+. Given the sensitivity of this topic, we do not expect Disney to lay out the benefits until after the full consolidation of Hulu post their completed negotiations with Comcast in the coming months.

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Categories: Blogs, Business, Inside Satellite, OTT, VOD

Tags: Disney, ESPN, Hulu, MoffettNathanson