WHEN: Today, October 7, 2019
WHERE: CNBC's "Closing Bell"
The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Disney CEO Bob Iger and CNBC's Julia Boorstin on CNBC's "Closing Bell" today, October 7th. The following are links to video from the interview on CNBC.com: https://www.cnbc.com/video/2019/11/07/disney-ceo-streaming-service-was-well-received.html and https://www.cnbc.com/video/2019/11/07/disney-ceo-im-a-netflix-subscriber.html.
All references must be sourced to CNBC.
WILFRED FROST: Welcome back. Disney's earnings just out. The stock is up 3.5% in after hours, a decent beat on the bottom line. Our Julia Boorstin joins us now along with Disney CEO Bob Iger in an exclusive interview. Julia, over to you.
JULIA BOORSTIN: Wilfred, thanks so much, and Bob, thanks so much for joining us here, right ahead of your earnings call. So, big beat on the top and bottom line. I know lots going on this quarter. But really what drove the upside surprise?
WILFRED FROST: Well, a solid quarter for the company driven by a great performance in our studio with just a tremendous lineup of films this past year and, in particular, this past quarter. And then parks and resorts and consumer products had a great quarter, as well. Those are the big drivers.
JULIA BOORSTIN: I know there's a lot of focus on streaming. You've been investing there. That division loss less than expected. But, as we get ready for Disney Plus to launch on Tuesday, can you give us any updates where that streaming service stands and how you plan to get it out to subscribers?
BOB IGER: Well, it's ready to go, I'm glad to say. We tested it in the Netherlands. We'll be talking about that a bit on our call. And it was quite successful. The product in the Netherlands did not have original content but extremely well received, not just in terms of number of subscribers but the user reaction to it. Very navigable, meaning, easy to use, elegant, great access to our brands and our story telling. So, that was very positive. But, we've had a tremendous marketing effort across the company with great synergy efforts and a very innovative marketing effort outside of the company. The product is ready to go, meaning, there's a lot of original contents available, a lot of library content. I think people will be extremely pleased with it when they get a chance to use it.
JULIA BOORSTIN: Any news you can give us about any distribution deals? I know, there were questions whether I would be able to download it from Amazon.
BOB IGER: Yeah, so, we have distribution deals with a number of different entities. We're pleased to announce today a deal with Amazon. We have deals with Apple, we have deals with Samsung, with Microsoft, with LG, with Google. So significant, significant progress in terms of distribution deals. And Amazon being the latest one. Yes.
JULIA BOORSTIN: Amazon, interesting because, of course, they have their own content as well. So, frenemies here in the streaming space.
BOB IGER: I guess that's one way to look at it. Yes.
JULIA BOORSTIN: So, I also have to ask you about Hulu. It's been about six months since you announced the full -- that you were taking over full ownership.
BOB IGER: Full control.
JULIA BOORSTIN: Full control of Hulu. How has your strategy for Hulu evolved, and do you have anything to announce there for us today?
BOB IGER: I do. The strategy for Hulu is evolving. We have a big announcement to make today and that is we're going create a huge FX presence on Hulu. FX, a highly regarded channel. You know, number of different accolades, particularly in terms of, you recognize the quality and boldness of their programming. Since 2014 they've had 277 Emmy nominations, and they've won over 55 Emmys, for instance. What we're doing is three things. First of all, for the first time FX will be creating original series for Hulu. In fact, we're going to start with four of them. There are four of them in production now. And they will be available on Hulu starting in probably late March. We're also going to enable viewers to watch FX shows on Hulu soon after they have aired on FX, just a few hours later. And then we're taking approximately 40 -- a library from about 40 series, 17 which are relatively recent in nature and making them available on Hulu and that's over 1650 episodes of television. So, tremendous presence. This will do a number of things both for FX but in particular for Hulu and for Hulu subscribers. There is no extra cost for this. Essentially, we're taking premium content and adding a significant more amount of premium content to Hulu.
JULIA BOORSTIN: Do you have any sense how this could help drive subscriber adoption of Hulu? Can you give us any guidance for those numbers going forward?
BOB IGER: -- We're not giving any specific guidance but I think it's a really good thing because of the brand that FX, I think, represents, meaning the power of its programming, the quality of its programming. I think it's a great thing for Hulu and it will be good for FX, too.
JULIA BOORSTIN: Everything you're doing right now, putting that will content on Disney Plus, you have more content available on Hulu, I have to ask, though, how this is changing your perspective about the health of the traditional TV business, your media networks. And how you can imagine these new businesses cannibalizing or putting pressure and driving more cord cutting?
BOB IGER: Well, I think it's very interesting what we're seeing. And that is that viewers now have access to watch programs in so many different ways. And what I mean by that is if you look at the accumulated rating of say a hit show on ABC throughout its run in basically the traditional VOD space and, you know, there's live versus live plus three and live plus eight, etcetera and so on. All the way through or its presence on Hulu. Some of our hit shows on ABC actually triple their ratings within a month of the initial broadcast. So, I think people are, who believe that the viewership of programs is going down, are not necessarily correct. Viewership programs are actually either staying the same or rising but they are just being spread out over time and over multiple platforms. When we look at our company, we look at a company that has live linear channels, we have also have significant television production and creativity capabilities and we have an SVOD platform in Hulu specifically. But also of course with Disney Plus and ESPN Plus. So, we have the benefit of creating and owning our own shows, airing them in a significant way on the initial channel, a linear channel, whether it's a live network or live cable and satellite channel and then capitalizing on consumption on new platform, notably SVOD and Hulu.
JULIA BOORSTIN: I understand your SVOD -- you are advertising supported and streaming SVOD service may be strong. But if you look at the health of the TV bundle with ESPN the most valuable piece of that TV bundle and many people say what's holding the TV bundle together, at what point will the value people are getting on streaming means tv bundle loses its appeal and are you going to be part of, you know, damaging your bread and butter?
BOB IGER: Well, we don't believe that what we're doing is really damaging our bread and butter, to use your words. What we really are doing is really a couple of things. First of all, we're giving consumers an opportunity to watch sports in new, sometimes considered more modern ways. More convenient ways. We're also establishing a path for us to continue basically success or profitability should the initial or the traditional business model be disrupted to such an extreme that it's a necessary transition that we have to make. So, we're prepared for that. The MVPD or expanded basic MVPD model is still very important to us and to others in the business. It drives a lot of revenue. It drives a lot of profitability. It drives a lot of consumption. We've talked a lot and quite candidly about erosion or sub-losses. They continue, which is all the more reason why we're doing what we're doing.
JULIA BOORSTIN: And just a quick couple of questions about the competitive landscape. Just last week, HBO Max unveiled many details about what it's doing, including a focus on younger viewers, in addition to kids content but millennials and younger viewers and kids content and a higher price – a much higher price tag than what Disney Plus launches. What do you think about that as a competitive offering and will it impact your subscribers?
BOB IGER: We're not focused that much on competition. We're focused on making sure the product we're bringing out is both successful from a bottom line perspective but also successful from a consumer perspective. We've got something that's incredibly unique. I talk about it a lot because of those brands: Disney, Pixar, and Marvel, and "Star Wars" and National Geographic and 30 seasons of The Simpsons, and, you know, great library content, great original content under all those brand banners. There's nothing like it for a price of 6.99 a month, which is incredible. Or 69.99 a year. Or you can actually bundle three services: ESPN Plus, Disney Plus and Hulu for 12.99 a month. That's a good deal.
JULIA BOORSTIN: Reed Hastings said just yesterday that he does not consider subscriber count the measure of success, but rather how much people are viewing. What will be the measure of success for your streaming services?
BOB IGER: Well, it will be a combination of things. We're clearly going to be focused on subscriber count. Consumption or individual consumption will be of interest to us. And ultimately profitability, of course.
JULIA BOORSTIN: Profitability, of course. And do you have any updates now that you're seeing people sign up early of how soon that might come?
BOB IGER: We're not saying anything specific today about how many people have signed up early and we're not changing our guidance either.
JULIA BOORSTIN: Reed Hastings said he will subscribe to Disney Plus. He'll watch. Have you subscribed to Apple TV Plus? Are you watching your rivals?
BOB IGER: That's nice to hear Reed say that. That's a ringing endorsement. I'm a Netflix subscriber. I can admit that here publicly. I also have availed myself of Apple TV Plus as well. I got that free, because I got a new device.
JULIA BOORSTIN: So, last question, because I know you have to run off to your earnings call.
BOB IGER: Yes, that would be a good idea.
JULIA BOORSTIN: There has been a lot of talk about how many different people are watching at the same time and Reed Hastings for many years said he wasn't worried about piracy, he wasn't worried about password sharing. What's your approach to piracy and password sharing?
BOB IGER: Well, I think it will be similar to what others are doing. It's obviously something we'll be mindful of. We're set up a service that's family friendly. We expect families to consume it, you know, four live streams at a time. You know, we'll watch it carefully with various tools, technology tools that we have available to us to monitor it. But it's obviously something that we have to watch.
JULIA BOORSTIN: Well, thank you so much for take the time with us today.
BOB IGER: My pleasure.
JULIA BOORSTIN: We really appreciate it. And we will be tuning into your earnings call which starts shortly. Thank you very much. Bob Iger. Guys back over to you.
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