With YODA in place, The Walt Disney Co.’s advertising-sales operation believes the Force is with it.

That’s not Yoda, the ancient Jedi master who trained Luke Skywalker in the original Star Wars movie. Or even Baby Yoda, the cute character from The Mandalorian, aka Grogu.

YODA stands for yield optimization delivery algorithm, which is a part of Disney’s programmatic ad-management platform. It’s one of the latest parts of the ad tech stack Disney engineers are building to help the company cash in as it pivots from linear to digital advertising. (Another piece of Disney ad tech is named after Drax, a character from Guardians of the Galaxy.)

The ad tech complements the premium Disney content with which advertisers have traditionally wanted to associate their brands.

The foundation of the tech and data investments Disney has been making to support its ad business is the global unified advertising platform initiative it started about three years ago.

“We have this vision of needing to invest in our own underlying technology platform for advertising as more consumption happens on addressable platforms like Hulu or Disney Plus so that we would have the capability to not only effectively deliver advertising in those environments, but also be able to string them together as advertisers are looking to be able to aggregate audiences at scale and reach them no matter where they are across the Disney ecosystem,” Jeremy Helfand, executive VP, ads and data platforms, Disney Entertainment & ESPN Technology, told Broadcasting+Cable. 

The Disney ad server was launched early last year with Hulu and Disney Plus was added in December.

“If we had not had the forethought of having that ad server and that platform available, it would have been very difficult to meet the needs of the Disney Plus with advertising launch,” Helfand said.

The platform is designed to address where Disney thinks the ad business is heading, in terms of being able to use first-party data to better target viewers and the increasing amount of buying being done using programmatic technology.

Helfand notes that an increasing percentage of Disney’s ad business is coming through either programmatic or self-service platforms. “Increasingly, programmatic is the new scatter,” he said.

YODA is designed to put direct buyers and programmatic buyers on equal footing when their orders come in and inventory has to be allocated for their campaigns. YODA uses machine learning and data science to optimize effectiveness for clients and maximize yield for Disney.

Making Addressability Automatic

Disney has stated a goal to make 50% of its addressable advertising come through automated pipelines. Part of that is programmatic and another part is self-service buying by clients through Disney Ad Manager.

“We work with over 5,000 advertisers now and about a third of them are working with us programmatically,“ Helfand said. ”At any given point in time you’re talking about thousands of advertisers who may have an ad that is appropriate for a given slot. So in near-real time, we’re looking across our ecosystem, telling our advertising partners as much as we can in a privacy-compliant way about the piece of inventory that's available.”

Disney Ad Manager gives smaller advertisers access to advertising on Disney content, Helfand said. Adding smaller advertisers to the mix creates the opportunity to generate more revenue, but it also means a greater variety of ads are served, which enhances the viewer experience, he said.

The ad platform is separate from the platform that actually plays content on Disney digital and streaming platforms, but they work closely together reporting to Aaron LaBerge, the chief technology officer for Disney Entertainment and ESPN.

Such coordination is vital to create the best experience for the viewer while integrating ads into the storytelling. Data enhances the experience by making the inserted ads more relevant to viewers. The technology also enables formats like pause ads (that appear when the viewers pauses the show) and binge ads (that promise that the next episode of a show will be ad-free thanks to the sponsor) that are less disruptive.

When a more traditional ad break is required, Disney limits the length to 90 seconds. On Hulu, a clock shows how much time is left before the content resumes. For some consumers, that clock moves too slowly, but Disney testing has shown that the clock sets expectations for the viewer.

“We found better results [with the clock] because at the end of the day, you’re trying to maximize engagement with the platform and also deliver a higher return on investment for the advertisers,” Helfand said.

A Nimble Platform

Having its own platform enables Disney to quickly turn out new ad products and deploy them everywhere in the Disney ecosystem. The platform also helps create a differentiated product in which the playback experience is enhanced by smoothly integrating relevant advertising into the content viewers are watching.

The ad tech group also works hand-in-glove with the ad sales group, headed by Rita Ferro.

“We do a lot of work closely together,” Helfand said. “What does the market want? What do they need? They'll go out and secure lighthouse customers for some of the new products that we want to test.”

The tests are designed to determine both how effective commercial formats are for the advertisers, but also how they affect engagement with the consumer.

The formats also have to help Disney’s bottom line. “The benefit comes in a couple different ways,“ Helfand noted. “One is increased revenue. The other is operational efficiency. We don't have to have as many people having to manually manage campaigns. They can create higher amounts of value for our advertisers if they don't have to do a lot of that. So you’ve got to look at both the revenue gain as well as the cost reduction. Sometimes they satisfy both.”

Disney recently announced that the ad-supported version of Disney Plus will be rolling out in Europe this year, enabled by the Disney Ad Server.

“Ultimately, our goal is that every brand that has advertising will be powered by the global unified advertising platform and the Disney ad server,” Helfand said.

Having the technology in-house is a benefit to advertisers because they don’t have to seek out and pay other ad tech vendors.

“We have a large ecosystem of partners and making our platform interoperable with those partners is key,“ Helfand said. “But the fact that you're coming directly to Disney does make it more efficient. The other thing that I would say is because we can create those insights more quickly than you can optimize and reduce waste as well.”

Eyeing an Edge Over Netflix

The technology should also give Disney Plus an advantage over Netflix, which also last year launched an ad-supported service. “In order to deliver the very best viewer experience, having your ad technology deeply integrated into the service is really important,” he said. “I think we have a distinct advantage not only over Netflix but you know, many of our competitors.”

At Disney’s upfront presentation last month, Ferro touted the company's technology and data capabilities.

“Every time we go into an upfront like this, clients want to know about the new products and capabilities. So whether it's rolling out new formats, new first-party data solutions for measurement or currency or the ability to take advantage of programmatic and self-service, it’s really important.”

Helfand says Disney sees itself competing with the big digital native companies that grew up using audience data to power their advertising businesses, like Google, Facebook and Amazon.

“We need to make sure we have the very best audience-based advertising capabilities in market,” he said. “If you marry that with the unparalleled content that Disney has, then we can outcompete everybody.”

With all that’s going on at The Walt Disney Co., the question of what happens to Hulu remains.

Disney could buy out Comcast’s 35% stake. Or it could try to sell the streaming service to Comcast. But according to analyst Michael Nathanson of MoffettNathanson, there’s a third option.

Nathanson suggests that both parties could be well served if each owned half of Hulu.

“If Comcast is willing to rework the deal, we think it could be an elegant way for both companies to claim victory and end up with a 50/50 joint venture that is unconsolidated from [either company’s financial] results,” Nathanson said in a research note Thursday.

“Disney would still be able to retain control of the content production, especially all the FX Networks programming that feeds into Hulu,“ Nathanson said. “Importantly, this would avoid Disney having to cut a $9 billion check to Comcast and have the excess cash to further de-lever and invest in its other streaming and linear businesses.” 

And while Comcast shareholders might like getting paid $9 billion for their stake in Hulu, having half of the streaming platform could mean turning away from Peacock, which is expected to lose $3 billion this year.

Taking Peacock out of the equation would rationalize the fragmented streaming business, shortening the path to profitability for all of the media companies making the direct-to-consumer pivot.

“To be sure, it might be a blow to the ego to cede ownership of the customer. But one of the clear lessons of the streaming wars thus far is that 'owning the customer' isn’t all that it’s cracked up to be,” Nathanson noted.

Hulu was originally set up by NBC, Fox and Disney to stream network shows. Disney wound up with a controlling interest in the streamer when it acquired 21st Century Fox, with Comcast -- now NBCU’s parent company — owning the rest.

In January 2024, both companies have the right to resolve Hulu’s ownership, either with Comcast making Disney buy them out, or Disney forcing Comcast to sell its stake. The trick is determining a “fair value.”

On CNBC Thursday Iger was he wouldn’t rule out selling Hulu, and was non-committal about buying it.

Last year, Comcast CEO Brian Roberts said he’d like to buy Hulu, if it were for sale. 

Nathanson called buying Hulu a terrible idea for Comcast. “Surely even Comcast will see that why that would be a terrible idea. The real value in Hulu is in the content and production behind the consumer brand; stripped of its content supply, it is little more than a shell,“ he said.

“We believe a return to the consortium model, if it meant cutting the losses at Peacock in favor a larger consortium-backed Hulu, might be better for everyone involved,” Nathanson said. ■

The Walt Disney Co., looking to beef up its ESPN Plus streaming service, is talking to the National Football League about its Sunday Ticket out-of-market game package, now with DirecTV.

On Disney’s earnings call Thursday, CEO Bob Chapek said Disney was considering and “in conversations about” acquiring rights to Sunday Ticket.

Also Read: Major League Baseball's Disney Deal Includes Streaming

“Obviously it’s an attractive property, but we’ll only do it, just like our other rights, if it is something that adds shareholder value.”

Disney is a long-time rights holder with the National Basketball Association. It recently signed a new deal to add National Hockey League games and renewed its agreement with the NFL. On the earnings call, Chapek announced a new deal with Major League Baseball and Spain’s La Liga soccer league. 

Also Read: Streamers Are Key to NHL Return to Disney

“Live sports are a very important component of our content business. And even amidst the challenges of the past year, we have continued to build our unrivalled portfolio in a disciplined way,” Chapek said.

“While our overall strategy is still very supportive of our linear business, given the important economic value for the company, we are also building out our ESPN Plus direct-to-consumer offering, he said. “And with every deal we make we are considering both the linear and DTC components.”

On the earnings call, one analyst asked Chapek if Disney had an appetite for more sports rights.

“We have a full house here,” Chapek said. “In terms of our appetite for going further, in terms of what’s really left, there’s not much.”

The National Football League cashed in on having the most powerful programming on television, signing new rights deals that will pay it billions of dollars over the next 11 seasons.

The deals mostly keep games where they’ve been the last few years. The biggest changes include The Walt Disney Co. adding two Super Bowls on ABC to its ESPN Monday Night Football deal and Amazon becoming the primary carrier of Thursday Night Football, with Fox dropping out of the package. The league obtained fee increases and will rake in more than $100 billion from the new deals, various outlets including the New York Times, Wall Street Journal and Bloomberg reported.

Sunday Night Football, TV's most-watched show, stays with Comcast’s NBCUniversal, and Fox and ViacomCBS’s CBS keep their Sunday games.

"We're proud to grow our partnerships with the most innovative media companies in the market," NFL commissioner Roger Goodell said in a statement. "Along with our recently completed labor agreement with the NFLPA, these distribution agreements bring an unprecedented era of stability to the League and will permit us to continue to grow and improve our game."

Also Read: Super Bowls to Head to ABC In New Deals

Streaming is a big part of the package. In addition to Amazon streaming Thursday games, ESPN will be able to put its games on ESPN Plus, including one exclusive game per season. Viacom CBS will have games on Paramount Plus, NBCU will have playoff games on Peacock and Fox will be able to stream the games it has rights to and has plans for NFL programming on Tubi. 

For Amazon the number of regular-season games included in the Thursday Night Football package is increasing from 11 to 15, with all games airing on Prime Video as part of a Prime membership. Each game will also be broadcast in the participating teams’ home marketplaces.

“NFL games are the most watched live programming in the United States, and this unprecedented Thursday Night Football package gives tens of millions of new and existing Prime members exclusive access to must-watch live football on Prime Video,” said Mike Hopkins, senior VP of Prime Video and Amazon Studios. “NFL fans from across the country will enjoy a premium viewing experience with Thursday Night Football, as well as access to a broad selection of content including award-winning Amazon Originals available on Prime Video.”

Prime Video will deliver new pre-game, half-time, and post-game shows.

“Thursday Night Football will be our first-ever digital package and we are thrilled to exclusively partner with Amazon to bring our games to more fans on more platforms,” said Goodell. “NFL football drives passionate viewers and Amazon will enable us to continue to grow our fanbase in innovative and compelling ways.” 

Also Read: Will Amazon Go Deep For NFL Football?

ESPN will get 35% more games as part of its deal, which runs 10 seasons starting in 2023. There will be more weeknight games when Monday Night Football features doubleheaders (separate games on ESPN and ABC). ESPN will also get some Saturday games. ESPN gets a better schedule and the chance to flex games to switch out of games with poor matchups.

The ESPN deal also gives the channel rights to highlights for its studio shows. 

“When ESPN and the NFL work best together, the results are transformational for sports fans and the industry. Some of the most remarkable collaborative examples have occurred in the past 12 months and have demonstrated the extraordinary range of The Walt Disney Company that is fundamental to this agreement,” said Jimmy Pitaro, chairman of ESPN and Sports Content at The Walt Disney Co. “There are so many exciting new components, including Super Bowls and added playoff games, new end-of-season games with playoff implications, exclusive streaming games on ESPN Plus, scheduling flexibility and enhancements, and much more. It’s a wide-ranging agreement unlike any we’ve reached with the NFL, and we couldn’t be more energized about what the future holds.”

CBS Sports will be the home of Sunday AFC games through 2033, with all regular season games broadcast on the CBS Television Network and streamed live on Paramount Plus. Games will appear on both Paramount Plus’s $9.99 premium tier and its $4.99 ad-supported tier launching in June.

The CBS Television Network and Paramount Plus will present a full slate of playoff games each season, featuring the AFC Championship game, one divisional game and one wild card game. A second wild card playoff game will be added to the CBS Sports lineup during the 2024, 2029 and 2033 seasons.

“The NFL has been a cornerstone of CBS Sports programming for more than 60 years. We are extremely pleased to extend our long-standing partnership with the NFL for the next decade,” said Sean McManus, Chairman, CBS Sports. “The NFL is the most valuable content in all of media, and we are excited that the deal allows for more Sunday afternoon games than ever before and we retain the NFL’s most-watched time slot. This wide-ranging deal includes significantly expanded rights, and we look forward to continued growth and to maximizing the enormous value of the NFL across all of our CBS Sports platforms.”

Fox's 11-year package extends its coverage of the National Football Conference on Sundays through 2033. The rights include direct to consumer opportunities, including opportunities to put NFL programming on Tubi.

“Today we extend our 27-year partnership with the NFL and solidify the foundation of our marquee sports portfolio beyond the end of the decade. In addition to maintaining our leading Sunday afternoon NFC package, we are pleased to broaden our deal to include new digital rights that provide us with the flexibility to deliver NFL on Fox to customers in expanded and innovative ways,” said Fox CEO Lachlan Murdoch. “This long-term agreement ensures that we will continue to deliver the best in football coverage to our viewers while also strengthening and providing optionality to our business.”

Fox will create an NFL experience on Tubi consisting of premier VOD as well as condensed games throughout the NFL season. Also Fox Bet will receive authorized sportsbook operator status if, and when, the NFL approves sportsbook operators for its officially licensed intellectual property.

NBC Sports continues to air Sunday Night Football under its new 11-year extension. It will continue to have flexible scheduling, starting with week 5 of the schedule. NBC  will remain home of the NFL Kickoff Game.

NBC’s Peacock will stream wild card and divisional playoff games each season.

“We are excited to expand upon our relationship with the NFL, which is the most powerful content in sports and entertainment,” said Pete Bevacqua, Chairman, NBC Sports Group.  “Sunday Night Football has been television’s most-watched primetime show for a decade, and we look forward to continuing our best-in-class presentation of SNF, Super Bowls, and playoff games for many years to come, while also broadening our audience with Peacock becoming the live streaming home for all NBC NFL games.”

NBC Sports said the long-term agreement can be terminated on a one-time basis by the NFL after seven years.

“While media giants ABC, NBC, CBS and Fox spike the ball in the end zone, ACA Connects members are troubled because they know these deals will leave millions of consumers with the financial equivalent of a torn ACL," said ACA President Matt Polka of the new deal. "Broadcast networks and TV station owners like Sinclair, Nexstar, Tegna and Apollo Global Management will continue to leverage the broken retransmission consent rules to demand excessive fees from smaller cable operators, driving up the cost to watch what broadcasters like to call ‘free TV.’ In order to make up for their massive NFL obligations, broadcasters will hike their prices even higher — and, ironically, use blackouts of NFL games themselves in order to do so."

The Walt Disney Co. made its video domination aspirations official Thursday, agreeing to buy key assets from 21st Century Fox in a $52.4 billion all-stock deal ($66.1 billion including debt) that will make the world’s biggest content creator even bigger, fueling its plan to become a streaming video and traditional programming powerhouse.

UPDATE: Iger Says Fox Will Help Accelerate Direct-to-Consumer Plans

When the dust settles, Disney will control the 20th Century Fox movie and television production studios, cable channels FX, FXX and National Geographic, 22 regional sports networks and Fox’s 39% interest in European satellite TV service Sky and its 30% interest in streaming service Hulu, in addition to its Disney studios, cable networks ESPN, Freeform and Disney Channel.

Fox, which stands to become a major Disney shareholder as a result of the deal (Disney plans to issue 515 million new shares for the transaction, giving Fox shareholders a 25% pro forma stake in the content giant), will retain its Fox broadcasting operations, Fox News Channel, Fox Business Network and sports channels FS1, FS2 and the Big Ten Network, which will be spun to shareholders prior to he deal closing to ease the tax burden.

Related: Murdoch: Disney Deal a ‘Momentous Occasion’

Under the terms of the deal, Fox shareholders will receive 0.2745 Disney shares for every 21st Century Fox share they hold. Disney will also assume $13.7 billion of 21st Century Fox debt. Overall, the transaction implies a $66.1 billion value for Fox

Disney chairman and CEO Bob Iger has agreed to stay in that role through 2021, adding another year to his employment deal. Iger was originally scheduled to retire in 2019.

“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” Iger said in a statement. “We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”

Also as part of the deal, Fox will continue to pursue the purchase of the remaining 61% in Sky it doesn’t own. Once that deal is completed, assuming it is done before the Disney deal is closed, Disney would assume full ownership of Sky.

With the Fox assets, Disney will be able to pursue its direct-to-consumer strategy full bore. An ESPN-branded offering, ESPN Plus, is scheduled to debut in 2018 with a Disney content product expected the following year. With the Fox studio assets, that Disney-branded product just got more robust.

The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction.

“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said 21st Century Fox executive chairman Rupert Murdoch in a statement. “Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”

Media consolidation critic Public Knowledge was quick to call for a tough government review of the Disney-Fox deal, which it said would combine must-have programming, notably sports, and which it also said would lead to higher prices for video content.

“Antitrust authorities should thoroughly examine the incentives and power a combined Disney-Fox may have to harm consumers and competition," said PK senior policy counsel Phillip Berenbroick.

"Disney’s acquisition of Fox’s regional sports networks, which carry thousands of local NBA, MLB, and NHL games, as well as college athletics, is also a cause for concern," Berenbroick added. "Disney’s ESPN-family of networks is already the most valuable, and most expensive, sports programming network in the cable bundle. The addition of Fox’s regional sports programming may significantly increase Disney’s bargaining power over local cable providers because consumers demand access to their local professional and college athletics.

"The combination of these assets may also give Disney the power to negotiate even higher prices and more preferential treatment for the rest of its video programming, as well as unprecedented control over both national and local televised sports." he said.