The Walt Disney Company announced this week that it will acquire full ownership of the popular streaming service Hulu. Disney had previously owned a 67% controlling stake in Hulu, with rival Comcast/NBCUniversal owning the remaining 33%. However, after months of negotiations, Disney and Comcast reached an agreement for Disney to buy out Comcast’s minority share in a deal valued at $27.5 billion.
Background of Hulu and Previous Ownership Structure
Under their 2019 agreement, Disney had the right starting in 2024 to buy out Comcast’s remaining stake based on an independent valuation of Hulu. However, Disney chose to accelerate that timeline and reach a deal to acquire Comcast’s interest this year instead.
Acquisition Price and Terms
Disney will pay Hulu approximately $8.61 billion to Comcast for its 33% minority stake, based on an estimated enterprise valuation of $27.5 billion. The final purchase price will be adjusted once Hulu’s fair market value as of September 2023 is determined through an independent appraisal process. That process is expected to be completed sometime in 2024.
Comcast will retain its shows currently available on Hulu until late 2024 as part of the deal. NBCUniversal has already begun transitioning its content over to its own Peacock streaming service.
Why Disney Wanted 100% Ownership of Hulu
By taking full control of Hulu, Disney can more tightly integrate the platform into its broader streaming strategy. Disney sees Hulu as appealing to older audiences who grew up watching ABC, Fox, and NBC shows. This contrasts and complements the family entertainment focus of Disney+.
With nearly 48 million subscribers, Hulu still has plenty of room to grow in the increasingly competitive streaming market. Disney believes full ownership will allow them to expand Hulu faster through increased content investments and foreign launches. Hulu currently operates only in the United States.
Bringing Hulu entirely in-house also gives Disney flexibility to experiment with new subscription bundles and pricing models across its streaming portfolio of Disney+, ESPN+, and Hulu. Disney is increasingly tying its streaming services together as it pivots toward becoming a direct-to-consumer media company.
What It Means for Disney’s Streaming Ambitions
Acquiring the remainder of Hulu furthers Disney’s aggressive push into direct-to-consumer streaming, as traditional pay TV declines. After an initially slow start, Disney+ has emerged as a legitimate competitor to Netflix with around 160 million subscribers globally.
However, Disney recognizes the need for multiple streaming outlets to serve different audiences. The company has begun removing more adult-oriented content from Disney+ and housing it on Hulu instead, tightening the brand identities of each service.
Owning 100% of Hulu also gives Disney more flexibility in how it bundles and prices its streaming lineup. Look for continued expansion of discounted bundle packages across Disney+, ESPN+, and Hulu as Disney seeks to bring in more subscribers.
Unanswered Questions
A big outstanding question is whether Disney will choose to keep Hulu as an ad-supported platform in the long run, or potentially shift it to a premium subscription model akin to Disney+. Hulu still makes most of its revenue from advertising, but Disney is targeting profitability across its streaming services by 2024.
Another unknown is whether Disney will finally launch Hulu internationally once it has full control. Expanding Hulu outside the U.S. would give Disney a more global content hub as it repositions Disney+ as a family-friendly brand.
While Disney’s taking over Hulu ends years of ownership complexity, expect the entertainment giant to continue experimenting with how to best utilize Hulu as part of its streaming ecosystem.
