Disney to Buy Final Stake of Hulu, Take Full Ownership of Platform
By Movieguide® Contributor
Disney revealed that it plans to buy out Comcast’s 33% stake in Hulu for an expected $8.61 billion to take full ownership of the streaming site.
Disney has been seriously considering buying out Comcast’s stake in Hulu since Bob Iger returned as CEO last year and made streaming the company’s top priority. Any action on this desire has been impossible before now because of an agreement that only allowed these talks to start in January 2024.
However, the two companies accelerated the timeline so they could begin talks of a buyout at the end of September. This altered an agreement made in 2019 that allowed Disney to force Comcast to sell its stake at a later date for a fair market value that set Hulu’s total value at $27.5 billion.
Comcast believes that Hulu has become more valuable by multitudes now as it has continued to grow and enjoyed a massive bump during the pandemic. The company views Hulu as the second most valuable streaming service – behind Netflix – and expects the new assessment of the platform’s value will reflect this.
“[Hulu is] the #2 AVOD, SVOD service behind Netflix,” said Comcast CEO Brian Roberts. “In terms of engagement of customers, I think Netflix and Hulu are in a class by themselves. Based on Nielsen, there’s 2 to 3x the engagement for Hulu than any other streaming service, save Netflix.”
As such, he believes a fair market value evaluation will place Hulu well beyond the $27.5 billion set in 2019.
Despite a year beset with financial struggles, Disney is confident it can shoulder the cost of acquiring Comcast’s stake, boasting $1.6 billion of cash flow and $11.5 billion of free cash on its balance sheet for the most recent fiscal quarter.
“We’re going to have plenty of future cash flow to help fund all of this going forward,” said interim CFO Kevin Lansberry. “We’re prioritizing free cash flow as a company. And we’re being really disciplined and smart about how we go about allocating capital across the company.”
Disney is currently in the process of selling its Indian operations to Reliance Industries for roughly $10 billion.
Investors in both companies view the sale positively, with both companies’ stock prices jumping after the announcement.
Movieguide® previously reported:
Disney CEO Bob Iger announced that the company is delving deeper into streaming services, opening the door for some of its TV assets to be sold.
When Iger returned to the company in 2022, he was tasked with refocusing the company away from traditional television as millions of Americans cancel their cable subscriptions every year.
“After coming back, I realized the company is facing a lot of challenges, some of them self-inflicted,” Iger told David Faber at Allen & Co.’s annual conference in Sun Valley, Idaho.
“The challenges are greater than I had anticipated,” Iger later added. “The disruption of the traditional TV business is most notable. If anything, the disruption of that business has happened to a greater extent than even I was aware.”
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