Comcast Sells Hulu To Disney In $27.5 Billion Deal

Walt Disney
The entrance to Walt Disney studios is seen in Burbank (Photo: Reuters)

In what has been seen as a major move in the lucrative video streaming service industry, Comcast announced that it would be selling its ownership stake of Hulu to Disney.

The sale itself will not immediately happen and is scheduled to occur within five years. However, Disney will still be able to take full operational control of Hulu right away. This is a strategic move by the mass media and entertainment conglomerate, given its slew of recent acquisitions and its domination of cable television networks.

Prior to the deal, Hulu was at one point a joint venture company between the industry's biggest companies, including 21st Century Fox, NBC Universal, and WarnerMedia. With the deal signed by Comcast, Hulu is now effectively a Disney product as it now becomes the majority stakeholder of the streaming video service. WarnerMedia previously sold its 9.5 percent stake in Hulu, while Fox had also recently sold its assets in March of this year.

Comcast holds a third of Hulu's shares, which it will be selling to Disney at fair market value. Comcast's contract with Disney requires it to sell its entire stake in the company no earlier than 2024. Disney, on the other hand, has promised to pay no less than $27.5 billion for the streaming service, which is the firm's minimum equity value.

According to Disney's CEO Bob Iger, the acquisition of Hulu will now allow the company to offer its consumers a more complete package as it will be integrated into its streaming service portfolio.

Disney recently unveiled its Disney Plus product, a video streaming service aims majorly at kids and teens. Meanwhile, Hulu will likely be targeting a more adult audience with its adult-themed shows such as "The Handmaid's Tale."

Disney previously hinted that it may be offering a number of bundles to consumers to increase profitability. This would likely involve huge discounts for those who would get multiple subscriptions to the company's myriad of streaming services. By fully acquiring Hulu, Disney no longer has to deal with its previous owners and the headache involved with properly sharing profits.

Hulu currently boasts around 27 million paying subscribers, which is still way below the 150 million subscribers Netflix has as of the moment. However, with bundled subscriptions and a price tag that is significantly cheaper,

Disney could very well overtake Netflix in its number of paying subscribers. In line with this goal, Hulu is now ramping up its production of original programming, with a slew of new content now in the works.

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