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- [00:00]
A
Welcome back to the Bulwark. I am Sonny Bunch. I'm culture editor at the Bulwark. I'm very pleased to be joined today by Julia Alexander. We're going to be talking about cancellation, cancellation at Disney and Hulu at the streaming service over the whole Jimmy Kimmel thing. Big mass movement of folks. Before we get to that, just a reminder, hit, hit the subscribe button. Share this with friends if you're if you find this entertaining, amusing or educational because you're going to learn some things today. You're going to learn some things today about Churn Rate. I bet you've never thought about Churn Rate, but you're going to learn. You're going to learn. Julia's here to teach you. She's one of the smartest people I know about data in streaming. Julia, thanks for being on with me today.
- [00:37]
B
Thank you so much for having me. It's a true pleasure to do this with you in video form because I'm so used to doing with you in audio form.
- [00:45]
A
The people need to see you. That's my takeaway from the shift to YouTube. So here is the story. Here's the headline. Headline is after Jimmy Kimmel is pulled off the air, lots of people canceled their subscriptions to either Hulu or Disney or both or the bundle or whatever. Julia, break it down for us. What happened? What did you see in the data that was unusual for this time period for Hulu and Disney?
- [01:11]
B
So it's important to contextualize the type of data we're going to be using and talking about. We're not going to talk about the number of subscribers that canceled between Hulu and Disney, in part because that's really complicated to assign to any one thing. There could be a ton driven, of course, by the reaction of Jimmy Kimmel and his show being suspended. But there could also be that people moved over from Disney plus and Hulu into ESPN and that might have affected it. It could be that there was a renewal coming up and they didn't want to renew it. So what we're going to look at is the trend data specifically related to the uptick five days. In the five days following Jimmy Kimmel's suspension. Suspension. And what we saw based on data from Yipit, which is a data source that looks at credit card data. So looking at really the spending from consumers as well as browser activity, we saw that cancellations in the five days following the Jimmy Kimmel situation increased by around six times respectively, what was being seen in 30 days prior. So to put that into further Context that is higher than what we saw happen with Netflix in 2020 around the cuties controversy, which I'm sure you remember the documentary that seemed to. People were outraged about the pot potential sexualization of children or the perceived depiction of that. And this is also higher than what we saw happen in 2024 when Reed Hastings, who's the chairman of Netflix, donated $7 million to Kamala Harris's super PAC. So long story short, the data says that although we don't know how many people canceled specifically because of Kimmel, there was a huge uptick in Churn.
- [02:39]
A
Well, let's, let's break this down a little bit further. It's, it's. I'm glad you mentioned Cuties, because that was. I, I remember that story at least in part because it was, it was one of these things where there was a lot of chatter online and it wasn't clear how real the data was. And then all of a sudden the numbers came out and the Churn rate at Netflix was, I think, 5x what it usually was the week before. So it seemed to, it seemed to have a real, a real world impact. Whether or not that was a lasting, long lasting one or a short term blip, you know, when people came back is hard to say. But this number in particular is, is. I, I will say I was surprised at how large it was. I. This is the sort of thing that feels very online and you say, oh, well, you know, the Internet isn't real life, but in this case it definitely feels like it was.
- [03:30]
B
I think there's a few things around it and just related to what happened with Cuties and Reed Hastings, I think the numbers that yip it gave me break down to they saw an impact on net additions. So that would have been the number of new subscribers coming in, anywhere between 450,000 and 600,000. That was the negative impact that they saw based on those controversies. They don't give us the exact breakdown of it. So I won't try to go into that. But to your point, I think what really happened with Jimmy Kimmel is that the Cuties saga was really, really hyper online. Right. It was like it was a, it was a group of people who were spending a lot of time in film forums, on Twitter who were saying, I know what this is. I'm having a reaction. Ted Cruz is twee about and he's probably the most hyper online person within the Republican Party in terms of people within that space, not including people in various Internet pools that just kind of hang out all day. So that was one. It was like hyper online, but really, really niche. And then I think if you look at what happened with Reed Hastings, although there was this donation to Kamala Harris, which really would have emboldened a lot of Democratic supporters, it was related to a really feisty election campaign cycle. I think people were less inclined to necessarily take action using their credit card. But Jimmy Kimmel, he really hits a few really important quadrants. It's seen as an attack on free speech at a very scary time in American politics for many people. It is largely seen as this attack on a very beloved comedian. It is seen as the beginnings of something much more worrisome for people, which is why you had people on the left, including the right, you know, the Ted, the cruises, the Candace Owens, the Tucker Carlson saying that this is really not great. And so I think the fact that all this is happening in a very hyper specific American moment and Disney plus is far more reliant, and Hulu, of course, are far more reliant on their domestic base. That impact just was much, much stronger than what we saw happen with Netflix.
- [05:23]
A
Yeah, the point about the domestic base is interesting. I want to talk a little bit more about, again, churn rates and quarterly reports and that sort of thing here in a second. But the other, the other thing that does jump out is that this was. This felt like a thing that people were looking for ways to express their displeasure with in a way that we haven't seen with, say, the 60 Minutes settlement or the ABC News settlement. There was a lot of like, ah, what are you guys doing? Why are you. Why are you doing this? But there wasn't. People weren't like, we have to, we have to put a stop to this now.
- [05:57]
B
Right.
- [05:58]
A
And with the Jimmy Kimmel situation, you had, you had artists out there saying, we will not work with Disney again if they do this. You had, oh, boy. Who was it? There was a. There was a Disney plus actress who was like, I would cancel my Disney plus subscription. You know, like, it was. There was there. It felt like there was a real movement for concrete action. And this is like literally the only movement a lot of people can make. Nobody's. Very few people, I would guess we're canceling their Disney World vacation, you know, because that just. But this is, this is a thing you can do that will instantly show displeasure and hit Bob Iger where he is paying attention to it.
- [06:37]
B
Yeah. And I think I point out in the piece that to your point, you weren't going to cancel a trip. There was also no major Disney movie in theaters. So back in the day we might have seen people boycott going to the theater for a specific movie that wasn't the time to do it. The thing that I think about with the 60 minutes compared to Jimmy Kimmel situation, 60 minutes and news in general is hyper polarized to begin with. I think people look at what's happening with 60 Minutes and people are saying one, there's nothing on Paramount plus that I'm necessarily watching. So you have a less active base in terms of people who are going to say, I'm going to cancel this and they're going to feel that drunk impact. And it feels like I'm making a stand. Now if you just look at the comparison of engagement per month, Paramount plus, it's at like 2% of total engagement of TV sets in the United States compared to Disney and Hulu at 5%. But the other thing is the fact that he's this comedian, he is somebody that people have a parasocial relationship with. He is somebody who a lot of people saw in their minds didn't make necessarily a crude joke at the expense of a life that had just been lost. There was a lot of people said there's a misunderstanding happening. And Brendan Carr from the FCC is taking this in order to kind of clamp down on Disney and what's going on there. And so if you look at just the situation surrounding both 60 Minutes and Jimmy Kimmel, they're completely different. I think there's a world in which a lot of people in America will look at the idea of an edited transcript from Kamala Harris, an edited interview, and say, hm, I feel weird about that. Even though in my opinion CBS did nothing wrong there, my personal opinion, I could see how people might be upset about it and say, well, that's part of the news. I don't trust the news. You know, this is the problem with mainstream news. You know, that kind of rhetoric we've heard of the last few years, there's nothing super surprising or fear invoking about that moment. But with a comedian, with someone who is not necessarily being held to journalistic standards, who is a entertainer who is invited onto our screens every night, we like him because he, he pokes fun at topical stuff of the day. I think for so many Americans, that seemed to cross the line. And for Disney, you know, you have this really interesting situation which is you have a lot of, I imagine, left leaning or democratic people who say, I'm now going to cancel Disney and Hulu. This is my stand, I'm going to vote with My dollars, which of course people have always done. But I think you also get a backlash from the right when they reinstate him, when other things start happening. So there's no way in which Disney can fully win. And I think because streaming has become so paramount to these companies futures and consumers understand that this is the best way for them to direct their ire.
- [09:02]
A
Let's talk about the state of streaming just, just for a minute here because I do think this is the, the interesting kind of metatextual point of this whole thing, which is that if you are a multimedia company like, you know, Disney, Netflix has actually stopped reporting this. But you know, HBO Max or whatever, you're looking at subscriber numbers, you're looking at, we have this many subscribers domestically, we have, this is, you know, our average, you know, income per user is this much, whatever. And the, the problem for Disney, the problem for Bob Iger in particular was they've got a quarterly report ending, they've got a quarter ending soon. This is going to look bad if they can't turn it around quickly. What is the state of Disney, Disney's churn rate, just generally and also like the impact this specifically would have had on how those numbers look.
- [09:55]
B
It's a great question, I think, to look at where Disney is health wise with streaming. They're one of the few companies that are profitable, but we're not talking significant profit margins. We're not talking the kind of profit that Disney saw with its lucrative cable business, which of course streaming is supposed to help ease that Runway a little bit so that way they can start making those profit margins again. But they start to see a huge slowdown in both domestic and international growth. So when Disney came out of the gate, I mean, I'm sure you'll remember these numbers, right? It was like the first 24 hours was 10 million subscribers. Six months was, I think 52, 53 million. They ended the first year on like 84 million globally. If you look at what's happening, there's been a major slowdown. They've seen loss in both the international and domestic market. So to your point, there is a lot of concern over what Disney streaming business looks like now. Over the past couple of years they have started to shift away from just pure sub growth and focusing now on engagement and revenue per user. So Disney following Netflix is going to stop reporting new gross ads for its Disney plus and Hulu services as they focus on revenue as the key indication of health. But I do want to point out that any kind of inability to bring back the customers they lost in that domestic market really would go to show the declining perceived value that people have in Disney and Hulu, which is going to sunset next year. Hulu will roll into Disney in 2026 that the consumer market has in the US and that is a much harder reconciliation to make with analysts on the street and with shareholders. I think we're going to enter a period where people come in and out of streaming services, whether it's because of price increases, whether it's because of the lack of content that they're interested in, whether it's because of a political situation or cultural situation that arises and that's how they vote with their dollars. We're going to see that happen. The bigger issue is can you win back those customers? And so if Disney's already slowing down a little bit on the subscriber front, if the engagement has not necessarily increased, you, they have again, I said earlier a 5% shared engagement rate in the United States with Hulu when you look at the share of engagement on television screens in this country. But that hasn't shifted since January. It's 10 months or nine months, according to Nielsen's latest of just no real increase in engagement happening. At the same time, Netflix increased a full percentage point. YouTube increased by 2.5 percentage points. And so I think there is this idea of, okay, well, if Disney loses subscribers and they lose that engagement and they don't win those subscribers back, you know, how valuable is this? And then what is the long term success of this platform in the eyes of shareholders and analysts?
- [12:32]
C
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- [13:03]
A
Yeah, there was something you mentioned at the end of the newsletter that I should have mentioned this. You know, I'm talking to you because you had a, you had a great item in Matt Bellany's what I'm hearing newsletter at Puck that came out early, early this morning, early Tuesday morning. We're taping this. And it was, it was like again, full of information. That's why I got you on the phone, but there was a little. Just a little snippet there at the end. You know, thank God this is happening during football season for abc, Disney, espn, Hulu. What is the impact of sports here in terms of keeping people on the service? Because people will give up Bluey for a month, but will they give up Monday Night Football? I don't know.
- [13:49]
B
Yeah, when I was writing this piece, I started writing it last week and it went out on Monday. And so I couldn't point to the fact that ESPN and ABC had a Georgia, Alabama football game. Right. Which is like a main reason for a lot of cord cutters to sign up for a service like ESPN Unlimited, which Disney just launched last month. And so if you look at the numbers around what's happening with Disney, part of what makes contextualizing this data so difficult is the fact that in the first 10 days, ESPN Unlimited saw nearly 1 million subscribers come in. Four of the five of those subscribers that came in chose the bundles. They're coming in via Disney plus and Hulu as well. About 10% of them chose the annual plan, so they're less likely to cancel. There's a lot of activity happening in the fall because Disney still maintains the largest percentage of sports rights in the United States. And we know from all of the engagement data that we see over the last year or two of all the new subscribers, gross ads that we see come into these services. And when churn starts to happen, typically at the end of Q1, Q2, when football ends, sports is a major driver of streaming business. And so the fact that Disney has college football in the NFL, the fact that they're about to have basketball again, they are going to have some hockey, there's going to be some additional sports that really kick off in the fall. This was the best time for this to happen. Now, no one at Disney is saying this is the best time for this to happen again. They do not want this to happen to begin with. But I'm certain that they are so relieved internally that they had this leading into a very high net ad season. This is why Disney is increasing their prices now, because they know they have a huge content slate coming up. They can say, we want to increase our prices. We know we're going to have less churn than we normally have throughout the rest of the year. And so I'm certain that they are relieved it's happening now and not before the summer, when, although you might expect Disney to see huge increases in engagement because kids are off school, that actually tends to go towards Netflix and YouTube and it's a bit of a slowdown for Disney. So I mean it's kind of of the best of luck. They could have gotten in a totally rotten situation of their own doing.
- [15:54]
A
Yeah, yeah, yeah. This is the other thing is that it is, it is of their own doing. It's a mess of their own making. But this leads me to my last thought here, and this is maybe rank speculation. If you feel un uncomfortable speculating, don't. But it does strike me as the sort of situation where if I am a bean counter and I'm looking at this and the only thing I care about is churn rate and subscriber number and that sort of thing, I'm thinking to myself, how do we not get in this situation again? And one way not to get in this situation is to do the right thing, right? That's the easy answer. Just do the right thing. Another solution to this is to not have a Kimmel style show on your service at all. Just be like, this doesn't get us anything. We're done with it. And I do wonder, I do fear if that is the ultimate result of all this is just saying like, this isn't, this isn't for us anymore.
- [16:53]
B
One analyst who I routinely talk to made a really interesting comment after this whole thing happened. He was like, if your NBC is now the time for you to put SNL and Seth Meyers and Jimmy Fallon, I guess, on Peacock, do you just take them off NBC entirely? Because Brendan Carr and the FCC do not have jurisdiction over streaming in the same way that south park has always been somewhat protected because it's been on cable and then the Internet and now streaming again. And so there is this idea that if broadcast is declining in general, you know, a couple months ago broadcast, the share of time spent with broadcast on television sets in the US dipped below 18%. Streaming, you know, is catching up to that. YouTube alone is sitting at like 13, 14%. And so there's the argument to be made that can you just push people towards streaming by taking some of these shows and putting them there? I think that runs into a couple of issues. One, I don't think you have a lot of people signing up for Jimmy Kimmel or Seth Meyers in general. This is the issue with Colbert, which is, you know, the timing of that announcement is extremely disheartening. But that show was losing tens, if hundreds of millions. And so the fact that the late night format is no longer working on broadcast television and probably would not convince a lot of people to sign up for A streaming service, you know, happens to interplay at this moment when the politics around it are very, again, disheartening. But what I will say is that I think we're going to get to a point where the broadcast networks continue to matter less and less. And a lot of these companies that have streaming services, the Paramounts, the NBC Universals, the Disney's, the Foxes, they say we're just going to put stuff on streaming. That's where the audience is going anyways. And we'll play reruns on broadcast. We'll, we'll milk that for the affiliates. We'll let them take back time for whatever it might be. I think we're getting closer to that. The one thing I will say, because I think it's really important in this whole conversation is that, that Disney, that decision, even if it's a business one, should never come on the heels or because of concern around freedom of speech in a political situation like the. It should come from a fact that no one's watching broadcast anymore. We should just put Kimmel elsewhere. Fine, that's one decision to be made. But the fact that it comes because of perceived threats from the fcc, because of what may happen, you know, that is the point that we should not be getting away from in this whole situation. And so the thing I keep coming back to is like, Disney will be fine. Kimmel will be fine. They'll probably bring back a decent portion of those subscribers. Kimmel's audience will go back to the norms in a couple of weeks. But the next time that a government body, a arm of this administration comes for some aspect of these businesses, I think what we've seen happen over and over again from CBS and Disney and now others, is that this administration is not necessarily going to stop just because they get something out of a current deal, whatever it might be. We just saw what happened with YouTube and Google and paying that lawsuit. And so does it make sense to move all these guys over to streaming and kind of stop with the broadcast? I bet there's a business decision for that. Should it be because of this? Absolutely not.
- [19:55]
A
Yeah, I mean, but again, this, this, I totally agree on this, by the way. The Brendan Carr of it all is the thing that upends so much of these conversations, because I think, you know, I think they're. You could make a, a leg consumer backlash case for taking Kimmel off the air for a couple days and then putting him back on after everything cools down, whatever. But because Carr opened his big dumb mouth, it all got mixed up in Issues of free speech which are of paramount importance. But moving everything to off of broadcast and onto the streaming services does create a sort of direct consumer action risk.
- [20:37]
B
Yes.
- [20:37]
A
That is not present with broadcasts where ratings go up and down a little bit. And it's hard to say 500,000 people canceling their subscription in a day is a lot of money out of the pocket. It is like an actual. It's a thing you have to pay attention to. A million people canceling, 2 million people canceling. That worries me. For different reasons.
- [21:03]
B
Reasons.
- [21:04]
A
Non constitutional reasons, but different reasons.
- [21:06]
B
Yeah. I mean, I think you get to the point too where broadcast still has further reach than any of these streaming services. Netflix is the closest sitting at. They don't report anymore, but probably about 90, 100 million domestic subscribers. That's still not as much as broadcast. Disney plus and Hulu are sitting, I think closer to 60, 70 million domestically or combined, maybe about 100 million domestically. Again, still not reaching that. And so if you're going to reach audiences who are naturally going to get this as part of their antenna, as we're going to get this as part of their, whatever system that they're using, you're going to have higher reach. The advertisers still want to be there. There are affiliates that you're going to be working with. I think the question of contentious content and content where you're saying this might be a smaller audience to begin with and we'll move it to streaming and it'll be a draw for these audiences that we might make more per dollar from in the long run. That's a really interesting decision. I'm sure those conversations are happening within all of these different companies. But I also think it's important out that the differentiation between cable and broadcast, where cable is, you know, heading off a cliff. Broadcast again, we've seen some decline. It always picks up in the fall with college football in the NFL. It's still relatively stable compared to cable. And so you're going to see the Disney's and the NBC Universals and I guess the Paramounts really milk that we just saw with the deal that Paramount made with the UFC for $7.7 billion. When you talk to Ari Emanuel at TKO and Mark Shapiro, the thing they point to is not necessarily Paramount plus it's the fact they can be on C. And that's still true for a lot of people who work with Disney. The idea of being on ABC is still a really big deal. And so I do think you'll start to see some content decisions start to go the way of streaming because it just makes more sense for that specific type of programming. But I do not think, despite what that one analyst said about, you know, do you move Jimmy Kimmel over to Peacock? You're not going to see that happen, in part because those are broadcast format shows and also because those shows, like Jimmy Kimmel, do not necessarily drive subscriptions to streaming platforms. That is statistically proven.
- [23:07]
A
Yeah. Julia, thank you for being on the show today. Again, what is your title at Puck? You're contributing columnist. What are you. What are you? Reporter? I don't know. I don't know what you. What you're. What they call you over there.
- [23:18]
B
I think they call me a media correspondent.
- [23:20]
A
Okay.
- [23:20]
B
I think that loosely describes it.
- [23:22]
A
Yeah, Puck's great. You should. You should subscribe to Puck. Make sure you subscribe to the Bulwark YouTube page. Hit that. Hit that button, click like so people can see this and get a sense of what's happening in the world of streaming, why Kimmel got taken off and maybe why he got put back on. I don't think it's outrageous to say that this played no small part in that decision. And stay tuned. And we'll be back with more great content here at the Bulwark YouTube channel.
- [23:51]
B
Thanks, Sunny.