Comcast’s shifting strategy moved on this week. The flirtation with buying Hulu looks over, NBCU extended Peacock losses with a $110 million NFL exclusive, and NBCU stations blocked some NextGen TV viewers.
Comcast appears ready to sell its Hulu share to Disney
Comcast’s flirtation with the idea of buying Hulu from Disney appears to be over. At the MoffettNathansen Technology, Media, and Telecom Conference in New York, Comcast CEO Brian Roberts said it is “more likely than not” that his company will sell its third share of Hulu to Disney. The previously agreed deal will net Comcast a minimum of $9.3 billion.
It could be bowing to the inevitable. Disney clarified that Hulu remains central to its direct-to-consumer efforts in the US. The company is creating a combined Hulu/Disney+ app which it plans to market in addition to the individual apps. Bob Iger, Disney CEO, is committed to making Disney’s direct-to-consumer businesses profitable sometime next year. Combining Hulu and Disney+ helps in that goal by creating a much more attractive proposition than the two separate apps and does it without increasing spending on content.
Another factor driving the decision to cede Hulu to Disney could be that Comcast and NBCU are looking for an injection of cash. Peacock is racking up huge losses, and a new NFL deal this week only makes things worse.
Peacock gets an exclusive NFL playoff game
If a football fan wants to watch Thursday night football, they will need a subscription to Amazon Prime Video. Now committed fans and more casual viewers will need to sign up for Peacock to watch all the playoff games. NBCU paid the NFL $110 million for the exclusive rights to the second of two AFC wild-card games on January 13th. NBCU has the rights to two other AFC wild card games that weekend, but the others will be simulcast on NBC and Peacock.
NBCU is following the Amazon game plan. The eTail giant has leveraged exclusive live sports to get more people to sign up for Prime for years. For example, it bought odd-lot exclusive rights to Premier League soccer in the UK in early December 2018.
It is an expensive, risky play for NBCU. The company has promised that Peacock will reach profitability in a “reasonable” amount of time, but quarterly losses for the service reached an all-time high of $288M in Q1 2023. Unlike Amazon, which can offset expensive live sports rights against additional Prime members that spend more in its online store, Peacock can only rely on subscriptions and advertising. And the NFL viewers could sign up for $7 and then cancel at the end of the month.
NBCU encrypts some free-to-air NextGen TV signals
At NAB 2023, NextGen TV (aka ATSC 3.0) asked the FCC to help speed up the adoption of the new standard, which it seems willing to do. However, NBCU’s latest blunder makes it look like the industry isn’t willing to help itself! Tyler Kleinle, aka Antenna Man, noticed several NBCU over-the-air stations have added DRM encryption to their channels. Although the TVs with NextGen TV support built-in should handle the encryption just fine, the only two widely available tuner boxes from Zapper and HDHomeRun do not. Users are unstably frustrated, and Antenna Man is not amused:
“Why on earth would you put encryption on your stations’ signals when the only two external tuners on the market – the ones people are more likely to buy over a new TV – can’t decode DRM encryption yet?”
NextGen TV cannot afford any delays or missteps. It is in a race for its life against free streaming TV, whose ecosystem is filling out very fast. Beyond breaking the Zapper and HDHomeRun boxes, Antenna Man says that encryption threatens to restrict DVR usage and out-of-home viewing of TV channels. It seems entirely the wrong time to be reducing the value of over-the-air broadcasts.
