Disney Ad Boss Says Linear Is Still ‘Very Robust’ Business, Touts Multiyear Commitments for Sports

As viewership continues to decline on linear television, legacy media is seeing more ad dollars migrate to streaming. But Disney’s global advertising president Rita Ferro told TheWrap that the company’s own shift is “consistent with the pace of the decline of ad impressions available to buy” from its linear portfolio.

“There’s no question there is a trajectory downward across audience viewership on linear platforms across our portfolio and the marketplace — to some extent, greater in the marketplace than across our portfolio — but we are seeing that shift in those dollars across our platform as the dollars migrate to streaming,” Ferro said. “The importance of scale in streaming is equally a driver of our business and opportunity as our broadcast and cable networks businesses are because we sell it together as a whole entity. As dollars flow and audiences migrate from platforms, it’s all about the incremental reach that each platform brings.”

While Ferro believes that Hulu, Disney+ and ESPN+ are well positioned to capture those migrating ad dollars, she argued that advertiser demand for broadcast is still proving to be a “very robust” business.

“We’re actually seeing, to some extent in the scattered marketplace, a tremendous interest in continuing to buy linear television — specifically broadcast and sports — moreso than I think we had expected which is exciting to see,” Ferro added. “Nothing is able to drive the size and scale of an audience launch for a brand like broadcast television does and I think marketers still believe that’s an important mix of their overall marketing commitments.”

Despite the Hollywood strikes and ad market uncertainty last year, Disney closed its Upfront with revenue and commitments “in line” with the prior year, with more than 40% allocated to streaming and a single-digit increase in sports volume and pricing compared to the prior year. In 2022, Disney reported a record $9 billion in commitments.

This year, Ferro said that Disney is expecting to have “very solid” performance during its Upfront negotiations. On Tuesday, Disney CEO Bob Iger revealed that Disney+’s ad tier has a total of 22.5 million subscribers globally.

“We’re excited about the momentum that we’re seeing with the conversations we’re having,” she added.

Read TheWrap’s full conversation with Ferro below, which has been edited and condensed for length and clarity.

What’s the biggest challenge facing the ad market right now and what’s your recipe for success?

The biggest challenge is this incredible amount of supply that has flooded the marketplace. There’s just so many options for marketers that they have to be better prepared and do more homework than I think than they’ve ever done before in terms of where do you have the most opportunity to drive the outcomes you’re looking for and who are the best partners to do that?

Disney has the best opportunity and the best position because ultimately we are an unparalleled storytelling company with the best brands in the business across sports — a third of all the market sports impressions sit across our ESPN platform whether that’s on linear, streaming, sports fantasy, gaming, social — and the best brands across streaming in Disney+ and Hulu that have not only incredible scale and world class storytelling, but also have a level of engagement that few platforms in the marketplace have. When you marry that with ESPN+ on the sports side, they’re really unparalleled in their reach for connected TV across marketplace. And then ultimately a broadcast network that has the position as the number one entertainment network in the marketplace. That’s due to the quality of the storytelling on the platform, but also the amount of hours of live programming and incredible news organization that continues to deliver year over year across the market. When you look at broadcast, time and news continue to be the big drivers on those platforms.

So it’s really exciting when you have that breadth of a portfolio to really bring to market and a brand safe environment and best in class advertising technology that we’re known for. We’re really well positioned across traditional and new media companies to really drive those partnerships for success.

How do live sports and events factor into Disney’s advertising equation?

Our sports business has been growing its multiyear commitments year over year for a long time and this past year, we’ve seen a tremendous acceleration in those opportunities of brands wanting to commit in a multiyear way to sports properties across our portfolio and ESPN. That’s always a great indicator of how the marketplace will transact because last year didn’t feel the same. It was a tough advertising Upfront marketplace, but the overall advertising business was challenged. It feels different this year and we’re seeing that in the amount of multi-year commitments we’re getting.

Sports is a critical piece of our business going forward and when you listen to Bob [Iger] talk about it, it’s one of our four growth pillars that he’s laid out pretty consistently for the last couple of months when he speaks to the marketplace.

We’re very excited. This year we have expanded NCAA rights across both men and women’s championships, across eight different championships. It’s our first year of the SEC rights on ESPN and ABC, we have big relationships across the ACC as well. Our expanded college portfolio continues to be a significant driver for us in terms of the sports business and what we want to bring to market with marketers and a big driver of multi-year partnerships. That is a very passionate fan base and brands love to be part of that whether that’s through College Game Day, through sponsorships of those conferences and or specific sports around both men and women. We’re also excited about the performance of the NFL across our platforms. This past season was extraordinary and we’re very excited about what the means for the fall coming up. So there’s a tremendous momentum, energy and passion around sports.

What are you seeing in advertiser demand around ESPN DTC and the upcoming sports streaming venture with Fox and Warner Bros. Discovery?

ESPN has more than 35% of the sports hours across the marketplace and so we’re super excited about what that business is going forward and the joint venture which is just another avenue of distribution for ESPN. It’s really about the people who don’t want to be part of a traditional distribution cable ecosystem. They have the chance to now go through a a smaller bundle of networks that give them the content that they’re looking for and buy directly through that.

ESPN has been very forward about the fact that we will have a direct to consumer proposition that is broader than just live rights. It will be this play of surrounding the sports fan with every kind of experience they’re looking for through fantasy, sports betting, social, commentary, engagement, gaming — all of the things that really make sports unique and different and drive opportunity for fans to engage 24/7.

How do you view competition from ad-supported offerings from Netflix, Prime Video and others?

There’s never been a time where more robust opportunity exists in the CTV advertising space. Everyone now who is a major platform has an advertising tier but I will say having an ad tier doesn’t mean driving advertising growth and revenue. We know this because we have been in the business with Hulu for over 15 years and have invested tremendously in the right advertising and product technology to create the right experience for consumers, whether they choose to buy our platforms with advertising or without advertising. Our advertising businesses across Hulu is pretty significant and over half of our subscribers are ad-supported customers, and in Disney+ just over half the new subscribers that are coming into the platform are choosing the ad tier.

People don’t dislike advertising, they dislike bad advertising. So there’s been a tremendous commitment across our platforms to make sure we have the right advertising experience, the right advertising load and the controls to manage frequency across stacks so that you never have an experience that is off-putting or not right for that environment. We’ve also invested in a technology stack that allows us to really create an experience around the right targeting of audiences to enhance the outcomes advertisers are looking for across our advertising portfolio of streaming platforms to deliver those outcomes in the best, most effective way possible. And then advertising experiences that take into account AI and machine learning in terms of our algorithms so that people can manage frequency across our portfolio so that they can buy once and deploy everywhere and can plan across our full suite of measurement and technology partners, whether that’s buying direct, through programmatic channels — both programmatic guaranteed and or biddable environments.

We’re connected with the right technology partners that allow direct integrations into our tech stack whether a partner wants to buy directly with Disney or leverage their relationship with The Trade Desk, Google or Magnite. We have 110 million households and over 107 million device identifiers that we can use to actually target the customers our clients want to put their brands in front of to drive outcomes.

All of that at the end of the day is powered by the best in class storytelling which differentiates our platform. The brands and franchises that sit across Hulu, ESPN+ and Disney+ continue to resonate with consumers who are passionate about those franchises and brands, who love those stories and they really move the needle. We’ve been expansive in the types of content that we have across the portfolio as well as bringing them together.

Hulu on Disney+ has produced ultimately more engagement and time spent on the platform than we actually had even planned for in a very short period of time and we’re just getting started. That opportunity has really opened our eyes to the importance of the user experience, having the right technology and how you leverage your content platform to really elevate the right storytelling at the right time to consumers. So I’m very excited about our position among that competitive set because I know how hard this has been for us and we’ve been in it a long time and I know the commitment we have every day to continue to out deliver the expectations our consumers have on our platforms.

Speaking of Hulu on Disney+, what are you seeing in advertiser demand for the combined app offering?

Advertisers are super excited. We brought to market as part of the launch of Hulu on Disney+ one opportunity that you could buy advertising across both because many of our advertisers actually advertise across Disney and Hulu. So this allows them through one buy to manage their opportunity across both apps with all the controls that they’re used to.

We still have marketers who only want to buy either platform and those that do will be able to do that at their choice and those that want to take advantage of buying across both portfolios and match frequency and audience targeting and everything across the full suite of our streaming platforms are going to be able to do that. The optionality and flexibility around that and having everything on one technology stack is what allows us to do that and is enhanced by all of the targeting, all of the advertising experiences and innovation that we’ve built around that.

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