The Walt Disney Company, in an ambitious move to bolster its position in the streaming market, announced plans to acquire the remaining one-third of Hulu, a service it already majorly owns. But as Disney prepares to shell out billions, questions arise about Hulu’s real worth in a rapidly changing streaming landscape.
In a Nov. 1 announcement, Disney disclosed its intention to purchase Comcast’s NBCUniversal’s 33% stake in Hulu for approximately $8.61 billion, according to a recent statement. This valuation, set in 2019, prices Hulu at $27.5 billion. However, Disney indicated that the final price tag might climb, pending an upcoming appraisal. The deal’s closure is targeted for 2024.
Interestingly, this acquisition move traces back to 2019 when Disney seized a two-thirds ownership of Hulu following its massive $71 billion purchase of 21st Century Fox. That year also saw Comcast and Disney cementing a deal, allowing either side to initiate the sale of Comcast’s Hulu share from January 2024. Yet, with both companies recently accelerating this timeline, industry insiders were not caught off guard by Disney’s latest announcement.
While Disney seems prepared to approach the $9 billion mark for Hulu, the streaming platform’s genuine value remains a topic of contention.
Brian Roberts, Comcast CEO, in September commented, [$27.5 billion] was just a hypothetical that we picked five years ago because Disney had control of the company. The company is way more valuable today than it was then,” Corroborating this, Steven Cahall, an analyst at Wells Fargo, estimated Hulu’s worth at around $30 billion in September.
However, a less rosy picture of Hulu’s financials surfaced in April. An article from The Information, quoting anonymous industry insiders, suggested that Hulu might be overvalued. The same report underscored that entertainment giants, due to accounting conventions, could stretch content costs across years, thereby showing profits even when hemorrhaging cash. As of the previous fiscal year, Hulu’s expenditures reportedly surpassed its revenues.
Yet, with a solid subscriber base of 48.3 million as of July 1, Hulu remains a significant player in the streaming market, even if it pales compared to Disney+’s 146.1 million subscribers.
Will Disney own Hulu outright in the future?
With Disney on the verge of owning Hulu outright, it might be business as usual for most subscribers, at least initially. A looming concern, however, is the status of NBCUniversal content on Hulu, assured only until 2024’s end. Depending on the final deal contours, Disney might broker a lucrative licensing agreement with Comcast, especially if Hulu’s valuation falls short of expectations.
Further integration between Disney+ and Hulu seems inevitable. Disney already hinted at launching a combined app for both platforms. This could lead to enhanced user experience and interconnectivity between the two streaming giants.
Expect a much higher number of ads forthcoming on Hulu
Hulu’s average revenue per user stands at over twice that of Disney+, providing Disney ample opportunity to innovate its ad strategy. While Disney looks to consolidate its streaming assets, Comcast aims to amplify shareholder returns and repurchase stocks. With its Peacock streaming platform still in play, Comcast likely hopes to recreate the same audience magic it enjoyed with Hulu.
Disney’s complete acquisition of Hulu underlines the entertainment behemoth’s dedication to conquering the streaming world. But as the appraisal looms, the industry watches closely. The true worth of Hulu, amid the backdrop of a competitive and ever-evolving streaming landscape, remains the billion-dollar question.
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