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Disney to take full control of Hulu

The entertainment giant will pay at least $8.6 billion to purchase the remaining stake in the platform from Comcast

Luis Pablo Beauregard
the bear, serie de hulu
A scene from 'The Bear,' one of Hulu's most watched hits.©FX Networks/Courtesy Everett Collection / Cordon Press

Disney announced on Wednesday that it will buy the third stake in Hulu from Comcast. The entertainment giant will thus take control of the streaming platform, which launched in 2008. The deal requires Disney to pay at least $8.6 billion, although the two parties will negotiate the price of the shares in the coming months.

Hulu has almost 50 million subscribers in the United States. The platform is one of the strong cards in the digital strategy of Bob Iger, who returned to the helm of Disney last year after retiring. The iconic company leader believes the platform should be added to the Disney+ service: it was one of his priorities in his first turn as CEO. This would expand Disney’s offering to a new audience beyond families and children. Disney+ has some 146 million subscribers worldwide. Iger has also done his best to quiet repeated rumors of a possible sale of ESPN, the group’s sports network.

Disney’s announcement sets in motion negotiations to determine the value of Hulu, one of the first video-on-demand services. Its beta version was launched 16 years ago by NBC and News Corporation, the owner of Fox. The two companies created the platform with $100 million from an investment fund. Disney entered the business in 2009 through the ABC network, which took over two-thirds of Hulu. To date, the platform is one of the most popular outlet channels for Fox and ABC series such as The Bear and Only Murders in the Building.

Comcast and Disney had agreed in 2019 that Hulu was worth at least $27.5 billion. This will be the starting point for negotiation between the parties. Comcast took advantage of Wednesday’s announcement to communicate that it has high expectations for the evaluation process of its minority position. “We look forward to the appraisal process and the determination of Hulu’s fair market value which we expect will reflect the extraordinary value of the business,” the company said. Comcast CEO Brian Roberts said at a Goldman Sachs conference in September that Hulu is much more valuable now than it was then.

This puts Disney, which has faced a year of crises, on alert. To overcome these crises, the company has made cuts that have forced it to lay off thousands of workers and cancel the production of series and movies. The group has placed extra focus on the businesses that have proved profitable: Disney theme parks and attractions such as cruises.

Disney must make the first payment to Comcast before December 1. At the moment, it appears to be in shape to meet that commitment. In July, it had about $11.5 billion in cash and $47 billion in debt.

Disney has chosen JPMorgan to do the business valuation, while Comcast has hired Morgan Stanley for the job. If the figure presented by each side vary by more than 10%, the companies have agreed to ask a third party for the appraisal.

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