The Walt Disney Company (NYSE:DIS) is set to acquire Comcast (NASDAQ:CMCSA)'s one-third stake in Hulu for an expected $8.61 billion, putting the streaming service entirely under Disney's control once the transaction concludes later this year.
This acquisition aligns with Disney's aggressive push into the streaming industry, which has been a focal point for the entertainment giant in recent years.
Disney has declared that the acquisition of Comcast (NASDAQ:CMCSA)'s stake in Hulu at fair market value will significantly contribute to its streaming objectives as the company’s strategy shifts from traditional television, despite facing challenges from a declining Disney+ subscriber base.
The deal will put an end to long-standing speculation about the future of Hulu, though it still requires an appraisal process expected to be completed in 2024 to determine the streaming service's fair value before finalizing the sale price.
Hulu, a subscription-based streaming platform, has continued to grow despite increasing subscription costs, boasting hit original content like "The Handmaid's Tale" and amassing over 48 million subscribers. It has also been bundled with Disney's other streaming services, such as Disney+ and ESPN+.
The acquisition process began in 2019 under an agreement between Disney and Comcast, which granted Hulu a value of at least $27.5 billion. Disney CEO Bob Iger had publicly signaled the company's intention to acquire the remaining shares of the streaming service.
This strategic move comes at a time when Disney is making major shifts in its media business, with the company exploring options such as selling its ABC division and seeking a "strategic partner" for ESPN as it transitions from traditional linear television to streaming.
Disney faced a decline in its Disney+ subscriber numbers, which decreased by 7.4% from the previous quarter, totaling 146.1 million. In response, Disney announced plans to increase the price of its ad-free streaming tier and implement measures to combat password sharing, similar to actions taken by its streaming rival, Netflix.
Analysts are expecting a substantial year-over-year increase in both revenue and earnings per share (EPS) when Disney reports its fiscal 4Q earnings on November 8.
EPS is expected to reach $0.70 per share, coinciding with a 6% expected rise in revenue, projected at $21.33 billion, according to Zacks Investment Research.