• by Wayne Friedman , July 14, 2021

While there is some worry about a direct-to-consumer slowdown at Walt Disney, one analyst sees Hulu as a possible savior in future periods -- due to rising advertising revenue.

MoffettNathanson Research projects Hulu will gain 50% in ad revenues in the next quarter.

“The white-hot ad market should continue to propel Hulu growth during the 2H 2021 as TV ad budgets shift to AVOD [advertising-video on demand] due to lack of linear impressions,” writes Michael Nathanson, media analyst, at MoffettNathanson Research.

Full-year advertising revenue at Hulu is projected to be $2.9 billion. That comes to about 30% of its overall revenue, a projected $9.7 billion this year, with 70% coming from subscription fees. The analyst believes it will continue to grow in following periods.

For all Disney’s direct-to-consumer business, advertising will total $3.35 billion this year, going to $4.1 billion in 2022. Subscription fees are $12.4 billion (2021) and $16.5 billion (2022).

Looking at Disney’s linear TV networks, there is a silver lining: A slight rise in affiliate revenues (to 5% in the second quarter this year from 3% gain in the first quarter) and a narrowing of subscribers growth (a 4% decline in the second quarter from a 5% drop in the first.)

Analyzing its ESPN network and its advertising fortunes, MoffettNathanson notes: “If cord-cutting stabilizes, ESPN retains its dominance of linear eyeballs. And [if] Disney was able to secure meaningful price increases in recent upfronts, there is no reason to believe the company will not be able to sustain recent levels of linear ad revenues with pricing offsetting ratings shortfalls.”