Disney to Acquire Comcast’s Stake in Hulu for At Least $8.61 Billion

The Walt Disney Company announced on Wednesday that it has reached an agreement with Comcast Corporation to acquire Comcast’s 33% stake in the popular streaming service Hulu.

Under the terms of the deal, Disney will pay Comcast a minimum of $8.61 billion by December 1st, 2022 for its stake in Hulu.

This represents the minimum equity valuation of $27.5 billion that was agreed upon for Hulu in 2019, when Disney attained full operational control of the streaming service.

Negotiations Underway to Determine Full Valuation

The $8.61 billion price tag is simply the guaranteed floor amount that Comcast will receive. Disney and Comcast will now enter into negotiations and alternate dispute resolution to determine Hulu’s fair market valuation.

The final sale price could end up being significantly higher depending on Hulu’s growth and performance over the last few years. In 2019, the two companies agreed that if Comcast exercises its right to sell its stake, Disney will pay at least the total equity value from three years prior.

Why Is Disney Buying Out Comcast’s Share?

Disney has made streaming content and direct-to-consumer services a major strategic priority, with massive investments into platforms like Disney+, Hulu and ESPN+.

After initially planning to sell its stake, Disney reversed course earlier this year after further evaluation by CEO Bob Iger. Iger now believes Hulu’s general entertainment programming is a strong complement to the more family-friendly content on Disney+.

“It’s clear that a combination of the content that is on Disney+ with general entertainment is a very positive,” Iger said during Disney’s earnings call in May.

By consolidating full ownership of Hulu, Disney will have more flexibility and control over their streaming strategy. Disney also likely wanted to preempt Comcast from potentially trying to acquire the full platform.

Hulu’s Growth and Programming

Comcast originally considered buying Disney’s controlling share of Hulu, but reportedly backed off due to concerns over content licensing rights. Hulu features many shows and movies from Disney’s extensive catalog of entertainment properties.

Hulu has grown into one of the largest streaming platforms behind only Netflix, Amazon and Disney+. As of July 2022, Hulu has around 48 million total subscribers to its on-demand and live TV services.

The service offers acclaimed original programming like “The Handmaid’s Tale,” “Only Murders in the Building,” “The Dropout,” and many more. Hulu also remains the exclusive streaming home to many popular network TV shows. The additional content expands Disney’s overall offering beyond just family-oriented programming.

Disney Continues Streaming Investments Ahead of Earnings

The Hulu acquisition comes as Disney prepares to report its fiscal Q4 and full year 2022 earnings results on November 8th. Investors will be listening closely for updates on profitability and subscriber growth across Disney+, Hulu and ESPN+.

Disney has already warned that the latest quarter will see lower subscriber additions amid economic uncertainty and rising competition. But the company is moving full steam ahead with efforts to improve content, expand globally and integrate operations.

Earlier this year, Disney announced it will be merging the Hulu and Disney+ apps into a unified streaming experience. The move could further boost subscription growth as customers gain access to both libraries under one service.

With full control of Hulu expected by year’s end, Disney will have more flexibility to create packages and drive synergies across its streaming ecosystem. But the price tag underscores the massive investments still required in the rapidly evolving digital media landscape.