- Sparring between Disney and Comcast CEOs over Hulu has stoked uncertainty among insiders about the streamer's future.
- Hulu's ongoing integration into Disney has eroded morale and changed the company's startup vibe.
- Many wonder how Hulu will stay differentiated from Disney+ if Disney becomes Hulu's sole owner.
The battle over Hulu heated up last month when the CEOs of Disney and Comcast publicly sparred over their jointly owned asset — laying bare a contentious negotiation over the streamer's future that had previously flared behind C-suite doors.
The war of words stoked frustration and confusion among Hulu staffers who've been waiting for their place in Hollywood to solidify since 2019, when Disney's acquisition of Fox's entertainment assets gave it majority ownership and operational control of the upstart streamer.
Both chiefs are seeking an edge in determining Hulu's worth. By the terms of their 2019 "put/call" agreement, Disney can buy Comcast's 33% share of the streamer as soon as January 2024; the companies agreed to a minimum valuation of $27.5 billion, and independent experts will set the final valuation based on fair market value. But with Wall Street cooling on the streaming business, what "fair" will look like in 2024 is an open question.
The back-and-forth between Disney chief Bob Chapek and Comcast's Brian Roberts — with Roberts saying that Comcast would like to own Hulu outright — has amplified concerns among industry insiders about how soon Hulu's joint ownership could resolve and what the streamer will become, according to several current and former employees who spoke to Insider anonymously to protect their job prospects.
There's little doubt in Hollywood or on Wall Street that Disney will, sooner or later, be the sole owner of Hulu. That's what Comcast executives are expecting, according to a CNBC interview Tuesday with yet one more CEO, NBCUniversal's Jeff Shell. Once the deal is done, some inside Disney are bracing themselves for Hulu to potentially transition from a standalone platform to a branded content tile on Disney+ akin to the service's Marvel and Lucasfilm hubs.
It will sting for the little underdog that once thought it could take on the cable business.
"The benefit of folding into Disney+? Practically, I fully understand," said one former high-level Hulu exec. "Emotionally, it will feel like a big loss in the end of something that was very different from Disney. It will feel like a loss for probably all the people who worked on it. [But] business is business."
Spokespeople for both Disney and Comcast declined to comment.
No more happy Hulugans as 'every week someone was leaving'
Many Hulugans, as nostalgic current and former employees call themselves, have bemoaned the demise of the once-scrappy streamer's culture under Disney. Several former Hulu executives described to Insider a workplace that, during its early years, prioritized transparency and communication — not to mention fun.
Much like Hollywood disrupter Netflix, Hulu was a tech company first, one that went all out for its annual Halloween office party — known as "Huluween" — transforming cubicles into intricate replicas of '90s shopping malls and, in one case, a playable version of Mario Kart.
But Hulu has gone through several phases since it was launched in 2007 to stave off then-ascendant YouTube. Its original owners — News Corp's 21st Century Fox, Comcast's NBCUniversal, and Disney — united to contribute a free library of their networks' shows to the fledgling streamer, which was one of the first to carry ads.
Hulu is still a leader in the streaming advertising space, and while it's smaller than Disney+, with 46 million subscribers (vs 152 million), it earns twice the average monthly revenue per user.
But once the company became a Disney subsidiary, there was less transparency around Hulu's subscriber numbers and its slate of upcoming projects, said the former executive, who left in 2021. After years at the company, this person said, departing seemed inevitable.
"It became very hard to do my job when the priorities of the organization no longer supported the goals of my job," this person said. "Most people I know have left" since Disney took control, the exec added. "It got too difficult to send goodbye emails or have goodbye parties. Every week someone was leaving."
Pulling back from international expansion due to 'no brand awareness'
Changes at Disney only added to the confusion. In early 2020, the Mouse's direct-to-consumer and international chief Kevin Mayer visited Hulu's Santa Monica headquarters to reassure nervous staffers during a town hall that no further drastic changes were going to be made. That very same February afternoon, Bob Iger announced that he would be stepping down immediately as Disney's CEO, to be succeeded by Disney Parks veteran Chapek.
Also that month, Disney announced plans to roll out Hulu internationally — plans that were scrapped within months, to the frustration of insiders. The late-2020 decision to fold Hulu's original programming under a Star-branded tile for Disney+'s international subscribers surprised many staffers and, according to the first former high-level insider, prompted many people on Hulu's international team to head for the exits.
Chapek said at the time that Hulu had "no brand awareness" outside of the US, but some insiders and company watchers suspected that Disney reversed course to undermine Hulu's growth (and the price Disney would have to eventually pay for Comcast's share). In January, Hulu got a new president in Joe Earley, who was seen as a strong advocate for the company because of his ties to Disney brass and his political "superpower," as Insider previously reported.
But the streamer's integration into Disney has continued unabated, insiders said, as the pioneering upstart increasingly feels like just another page in Disney's linear and streaming portfolio. A common saying around the office is that "It's like we were the new Apple phone and now we're back to being the flip phone."
Perks and pay people enjoyed at Hulu have diminished under Disney. Benefits, which used to be the same for everyone from call center workers all the way up to the CEO, are now hierarchical, in accordance with Disney's existing offerings, said the first former Hulu exec. And Disney eliminated Hulu's typical year-end bonuses without making compensatory increases to base pay.
"At Hulu, every role was bonus eligible. Disney did not make up for it. For some people that meant a 10-20% pay cut," said this insider.
So many staffers have left, said a separate knowledgeable insider, that Hulu has stopped doing exit interviews.
Advertisers miss the old Hulu, too
Advertisers are noticing the changes, too, according to top ad buyers who spoke to Insider. They're still comfortable buying ads on Hulu, which they see as reasonably priced and experienced at delivering their ad campaigns. Hulu sales staff are now part of a larger Disney team, and advertisers like having a single sales contact who can speak to the conglomerate's entire portfolio.
But ad buyers have also noticed Hulu has become more rigid under Disney in terms of factors like where and how ads can run and requiring a minimum outlay from clients — a change that could bode ill at a time when there's more competition for streaming ads.
And combining sales teams may have reduced reps' depth of knowledge about each property. Huluween isn't just the name of a party, it's also Hulu's initiative around Halloween-themed content that historically was a top ads performer; this year, the insider with knowledge said, a small fraction of the available ads have been sold.
From a content perspective, Hulu is increasingly known for buzzy originals like "The Handmaid's Tale" and "The Bear," which complement its library of popular licensed TV shows. Insiders and advertisers alike are also watching to see if Hulu will lose some of its distinctiveness as Disney invests more in Disney+.
Some think the two services have maintained distinct identities, but as Disney has added more adult-focused fare like "Black-ish" to Disney+, it raised some insiders' eyebrows. "That was a clear departure from Disney being family-focused and Hulu being general entertainment," said a second former Hulu exec.
While many of those shows also stream on Hulu, former ABC competition show "Dancing with the Stars" now streams live and exclusively on Disney+ as the flagship streamer looks for subscriber growth from more grown-up viewers. Disney has played up the size of Disney+'s adult audience (more than half of subscribing households have no kids) as it prepares to roll out a cheaper version of Disney+ with ads.
In September Hulu lost next-day episodes of top NBC shows, including "Law & Order" and "Saturday Night Live," as NBC claws them back to feed its own streaming service, Peacock — the kinds of series that drive habitual watching with subscribers and kept Hulu an essential ad buy.
The traditional TV business broadly is in decline. The streaming business is getting more crowded. Marketers are pulling back amid fears of a recession. And it's still TBD how Disney+'s ad-supported tier will perform — which puts more pressure on Hulu to deliver.
And as the CEOs posture, people inside the streamer are eager for leadership to tell them, as a third former company insider put it, "what Hulu means to the Walt Disney Company."
This story first appeared on October 10 and was updated October 20.
Do you work at Hulu or Comcast? If you have insights, reactions, or a tip to share, contact reporters Lucia Moses at [email protected] (or by phone or Signal at 917.209.8549) and Elaine Low at [email protected].