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Hulu bought back AT&T’s 9.5% share for $1.43 billion, in a deal that put the streaming platform’s overall valuation at $15 billion, per Variety. This raises it almost $6 billion above Disney’s valuation from summer of 2018.
Here’s what it means: Hulu will distribute the stake back to its investors, and it’s likely that majority-owner Disney will be the biggest beneficiary.
Comcast has not indicated it will sell its stake in Hulu, but that could actually be an added benefit for Disney rather than a challenge. The share will be split between Disney, which presently controls 60%, and Comcast-owned NBCUniversal (NBCU), which owns 30%.
Should the stake be divided 2:1, mirroring current ownership, that would give Disney a 66% share, and NBCU 34%. Comcast-owned NBCU has desirable content — it owns cable channels like E!, USA, and Bravo, for instance.
And Comcast CFO Michael Cavanagh said the cable giant hopes to go where consumers are, and sees Hulu as an ideal place for some of Comcast’s content. Keeping NBCU’s content on the platform will only help draw and maintain interest from a broader set of consumers, and without much sacrifice, as Disney’s majority share allows it to control the strategic conversation around Hulu.
The bigger picture: Hulu will figure prominently into Disney’s broader streaming future, particularly by driving interest in bundles.
Hulu significantly increases the appeal of Disney’s planned bundle of the newly announced Disney+, ESPN+, and Hulu itself.Hulu is a thriving service: It gained 8 million new subs in 2018 for a total of 23 million paid subs. That’s less than a quarter of Netflix’s subscriber rate, but Hulu’s increase was the largest across all of the major streaming services.
Beyond being a generally popular platform, Hulu will help Disney’s service bundle appeal to an older crowd — like parents who are on the fence about signing up for Disney+, for instance. For the most part, Disney+ will capitalize on the classic, family friendly characteristics of the brand, catering mostly to a younger crowd, although it does have some fare for adults, including slated Star Wars shows and exclusive rights to The Simpsons. In other words, Disney can achieve broad appeal without sacrificing control over its brand on Disney+.
And providing an appealing bundle is important as consumers grow frustrated with service fragmentation. Bundling reduces service fragmentation, a trend consumers are upset about: Nearly half (47%) of US consumers say they’re frustrated by the growing number of subscriptions and services required to watch what they want, per Deloitte.
Providing a single point of payment — and a discounted rate — is likely to appease consumers looking for a simpler experience. The net effect will likely be low churn among subscribers who are happy to receive multiple high-quality services through one point of entry.
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Source: business insider