Hulu Sale Sets Stage for Disney-Comcast Showdown

On April 15, 2019, AT&T announced that it was selling its 9.5% stake in Hulu that was inherited as part of the Time Warner acquisition. By selling the stake, AT&T will unburden some debt it has of $170 billion since the ned of 2018. Hulu is now co-owned by two rivals- Disney and Comcast, and it is unsure what the future of Hulu is.

AT&T sold its stake back to Hulu for $1.43 billion, which was way more than Time Warner paid for it in 2016. This move will allow AT&T to focus on its own streaming service, which is expected to launch later this year. Furthermore, after the deal, Hulu was valued at $15 billion. It doubled its worth in two years, which shows its weight in the streaming battle. Hulu's main streaming competitor is Netflix. At the end of 2018, Hulu had 25 million subscribers while Netflix has 139 million. In spite of that, Hulu is gaining views/subscribers rapidly and its new valuation reflects that.

Additionally, Hulu is now in the hands of Disney, which owns a 60% stake, and Comcast, which owns a 30% stake. It is not clear how AT&T's stake will be shared between Disney and Comcast.

If Disney had full ownership of Hulu, it will not need to launch the Disney+ streaming service because it will start from zero subscribers, while Hulu already has 25 million subscribers. Co-ownership of the platform also means that Disney is not inclined to invest too heavily in Hulu, since Comcast reaps some of the rewards.

Although Disney had its recent acquisition of assets from 21st Century Fox and its investments in Disney+, it might be looking to buy out Comcast's stake. Comcast on the other hand, may not want to leave since it enjoys a significant passive revenue stream from the NBC content that runs on Hulu, as well as access to important data on consumer viewing habits and subscriber trends. That is valuable as it negotiates threats to its core cable business and makes its own move into streaming. Overall, the only companies affected with this streaming deal are Hulu, Disney, AT&T, while Netflix remains unbothered.

I chose this article because I have an on and off subscription to Hulu. Although this deal does not affect me, it is interesting to see how Hulu only has two major shareholders.

This article relates to marketing because Disney and Comcast are competing for the 9.5% stake AT&T sold. Also each platform has to find different ways to promote themselves. They can also offer different streaming options with different shows and movies that other streaming services may not have. This also increases competition because the more options a platform offers, the higher chance it has to attract customers.





Source: By Elizabeth Winkler April 16, 2019 11:19 a.m. ET
https://www.wsj.com/articles/hulu-sale-sets-stage-for-disney-comcast-showdown-11555427975