Bob Iger Confirms That Disney Will Buy Out The Rest of Hulu “As Soon as Possible”
Earlier today newly-extended Disney CEO Bob Iger sat down with CNBC’s David Faber for a wide-ranging interview.
While Iger’s comments on the ongoing WGA writers’ strike and The Walt Disney Company’s battle with Ron DeSantis have grabbed all the headlines, the Disney CEO also confirmed a piece of huge entertainment news. The Walt Disney Company will be purchasing Hulu in full.
Disney and Comcast’s 2019 Agreement
Earlier this year, Disney announced plans to combine the libraries of Hulu and Disney+ to crate a “one-app experience“. The move made sense from a functionality standpoint, however, there was one big hitch — Disney doesn’t fully own Hulu.
Under a 2019 agreement, Disney currently owns 66% of Hulu, while rival Comcast owns the last third. Per the agreement, however, Disney has the option to buy out Comcast’s share of the streamer beginning in 2024. Additionally, Comcast can force Disney to buy its stake.
Iger’s Big Hulu Decision
When Iger initially returned as CEO of The Walt Disney Company in November 2022, he reiterated that “all options were on the table” when it came to Hulu. At the time, many wondered whether the lack of profitability in streaming or Disney’s debt burden would entice the company to sell its stake in Hulu.
Whether that sale would be to Comcast or another media entity altogether remained unclear.
Following Disney’s “one-app” announcement, however, things changed. While neither Disney nor Iger publicly stated that they would be purchasing the rest of Hulu from Comcast, the writing was on the wall.
“There seems to be real value in having general entertainment combined with Disney+,” Iger said earlier this year in regard to the Hulu merger.
Iger Confirms Disney’s Hulu Plans
In his interview with CNBC today, Bob Iger publicly confirmed for the first time that Disney will in fact be buying out Comcast’s stake in Hulu.
According to Iger, this was not a decision he came to rashly.
“Part of the work that I’ve been focused on over the last seven months, is understanding all of these business. Where they are today, and where they could go,” he said.
With Disney having the option to purchase or Comcast to sell the remaining stake in Hulu beginning in 2024, however, Iger knew that he would have to make a decision.
“I didn’t want that to be an automatic. And I wanted to look at that objectively. I spent a lot of time looking at that as part of the future of our streaming business and ultimately concluded that we would be better off having Hulu than not having Hulu.”
A Major Step Towards Profitability
In the end, it came down to what the Disney CEO believes will be best for Disney’s direct-to-consumer business.
By combining Hulu and Disney+, Iger hopes to not only see the company’s streaming business become profitable but to become a growth business.
“Combining Hulu and Disney+ is a major step in that direction,” he stated.
Interestingly, Iger also noted that Comcast’s ownership of 1/3 of Hulu does not preclude Disney from combining its two streaming services. As such, while a deal with Comcast will not be consummated until 2024, Disney+ and Hulu will merge by the end of the year.
With that being said, Iger stated that he would like to see the deal closed “as quickly as possible.”
What Will Buying Out Comcast Cost Disney?
The final sticking point will be Hulu’s valuation. While Disney and Comcast’s agreement notes that the streaming service can be valued at no lower than $27.5 billion, Disney valued Comcast’s stake in Hulu at $8.7 billion in October 2022.
Comcast CEO Brian Roberts, however, has publicly stated that the value should be based on what Hulu could sell for on the open market.
“The job is to then give us one-third of that value,” Roberts said. “So I think we have a very valuable position.”
Luckily, per Disney and Comcast’s 2019 agreement, there are mechanisms in place to determine Hulu’s value.
With Disney’s “one-app” streaming service coming this winter, it is now a question of “when” and not “if” Disney will become the sole owner of Hulu.
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