A few weeks ago I reported on Disney’s intention to part ways with some TV networks and cable channels and focus more on streaming services. And that Disney is following through on this restructuring is shown by an acquisition announcement from last week.

On November 1st, 2023, The Walt Disney Company announced that it intends to acquire NBCUniversal’s 33% stake in the streaming service Hulu, LLC, which Disney does not yet own, for an estimated 8.61 billion US dollars.

Before I explain the details of the transaction, I’d like to give you a brief overview of the companies involved.

Brief overview of the companies involved Hulu LLC, founded in 2007, is, according to its own information, a leading premium streaming service. The company offers its customers live and on-demand entertainment. Hulu users have access to productions from all major US television networks, movie and TV series databases, and Hulu’s own productions.

In August 2023, Hulu had 48.3 million subscribers in the US, giving them access to more than 70,000 TV episodes and movies. The streaming service has 8 offices in the US and Beijing.

Comcast Corporation, founded in 1963 and based in Philadelphia, Pennsylvania, is one of the world’s largest technology and media companies. The company is the largest cable network operator, second largest internet service provider, and third largest telephone company in the US.

Comcast’s TV and streaming portfolio includes, for example, the NBC, NBC Sports, NBCUniversal, and Sky Sports channels. In addition, the media giant also includes Universal Pictures and DreamWorks film studios, among other things. Comcast is also represented worldwide as an operator of leisure and theme parks.

In the 2022 fiscal year, Comcast’s 186,000 employees generated a revenue of 121.4 billion US dollars. The operating profit (EBIT) was almost 13.2 billion US dollars.

The Walt Disney Company, based in Burbank, California, is a leading international family entertainment and media company, with three core businesses: Disney Entertainment (including The Walt Disney Studios, Pixar, 20th Century Studios, National Geographic, Disney + and Hulu, among others), the sports broadcaster ESPN and Disney Parks, Experiences and Products (e.g. Disneyland Resorts).

Disney’s approximately 170,000 employees generated a revenue of 82.7 billion US dollars in the 2022 fiscal year. The EBIT was 6.68 billion US dollars.

Further takeover details Disney has been involved with Hulu since 2009. With the acquisition of Fox in 2019 and the withdrawal of WarnerMedia, Disney became the majority owner of Hulu with around 67% of the shares. In the same year, Disney and Comcast announced that the remaining shares should also be taken over by Disney by 2024.

For the final takeover of Hulu, a minimum valuation of 27.5 billion US dollars was set in 2019. For the 33% share that is still in the possession of Comcast subsidiary NBCUniversal, Disney therefore has to put at least 8.61 billion US dollars on the table. If a current revaluation of Hulu results in a higher value, Disney will have to dig deeper into its pockets.

The stock market’s reaction The share prices of the companies involved in the Hulu deal reacted differently after the announcement of the deal on November 1, 2023. The Comcast share price rose on the US technology exchange Nasdaq by almost 1.3% to 41.82 US dollars.

The Disney share price, on the other hand, fell on the New York Stock Exchange NYSE by 0.6% to 81.07 US dollars. However, the Disney share price recovered significantly in the following days.

What happens next According to insiders, after the full takeover of Hulu, Disney will also offer the streaming service internationally, which so far has been limited to the US. Disney has not taken this step so far in order not to drive up the current valuation of Hulu.

The full takeover of Hulu is expected to be completed next year, according to Disney.