The companies still have to settle on Hulu's worth:
The Walt Disney Company, which currently owns two-thirds of Hulu, is buying the remaining third from Comcast's NBCUniversal to "further [its] streaming objectives."
Disney's announcement Wednesday said it's expecting to pay "approximately" $8.61 billion for the remaining 33 percent stake in Hulu. That figure is based on a 2019 valuation of Hulu, pegging the streaming service's value at $27.5 billion.
But Disney noted that it may pay more than $8.61 billion, pending an appraisal. Disney said it's unsure how long the appraisal process will take but expects to complete the deal in 2024.
Disney has owned two-thirds of Hulu since it bought 21st Century Fox in 2019 for $71 billion. Comcast also made a bid for the business.
That same year, Comcast and Disney entered an agreement that enabled either party to force the sale of Comcast's piece of Hulu, starting in January 2024. But the companies announced on September 6 that they were moving up that timeline, so this week's news was expected.
When the companies announced moving up the sales process, Brian Roberts, Comcast CEO, noted that the appraisal procedure would "take a little time ... to play out."
Disney sounds prepared to pay nearly $9 billion for Hulu, if not more, but there's reasonable debate over how much the streaming service is worth. Hulu's minimum valuation was set in 2019 when the streaming landscape looked very different.
Of course, Comcast only thinks Hulu has gained value.
"[$27.5 billion] was just a hypothetical that we picked five years ago because Disney had control of the company. The company is way more valuable today than it was then," Comcast CEO Brian Roberts said in September, as per Deadline.
In September, Steven Cahall, a Wells Fargo analyst, valued Hulu at $30 billion, via a research note, Bloomberg reported.
But the streaming industry's challenges can't be overlooked. Streaming services are struggling with a lack of growth and growing competition, turning to practices like password crackdowns, ad-tiers, and price hikes to drive revenue.
Disney has said Hulu has been profitable some quarters, but anonymous "industry executives" cited in an April report from The Information said they thought Hulu was worth less than its 2019 valuation.
The April report also cited "three people with knowledge of the matter," who claimed that "accounting rules allow entertainment companies to report content costs on their profit statements over a period of years, which is why a service can report a profit even if it is burning cash. And as of last year, Hulu's content, technology, and personnel costs outweighed the revenue it generates," The Information said.
As of July 1, Hulu was said to have 48.3 million subscribers. In May, Disney+ said it had 146.1 million subscribers, but that was after it lost 11.7 million subscribers in Q2 2023. That same quarter, Disney's streaming service losses were $512 million.
As it stands, though, Disney appears to be committed to the minimum price set in 2019.
(Score: 5, Insightful) by Revek on Sunday November 05 2023, @11:39PM
Soon enough it will all go back to 80 to a 100 a month for content. Cable 2.0 coming soon.
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(Score: 3, Funny) by krishnoid on Monday November 06 2023, @12:41AM (2 children)
Maybe they'll bring back Futurama [youtu.be].
(Score: 5, Informative) by looorg on Monday November 06 2023, @01:23AM
>Maybe they'll bring back Futurama [youtu.be].
They already did. Hulu had a season, two more already ordered. Question is are they going to start poking fun at the mouse now?
https://www.tvmaze.com/shows/538/futurama [tvmaze.com]
(Score: 3, Insightful) by VanessaE on Monday November 06 2023, @02:41PM
I was just getting used to Futurama being back on the air, and now this? Knowing Disney, they'll shoehorn some saccharine crap into the series, and then cancel it... again. For the umpteenth time.
(Score: 5, Funny) by Barenflimski on Monday November 06 2023, @01:10AM
That was easy.
Before I had to not subscribe to Hulu and Disney in two places. This is great. Now, I can not subscribe to both in one place.
Thanks Disney!
(Score: 2, Interesting) by crafoo on Monday November 06 2023, @11:50AM (1 child)
Television, especially cable television, is one of those things people will look back at puzzle over. It exists in a small moment in time; about 5 generations. No one I know under 40 watches TV unless they are visiting a gen-x-er or boomer family member. I associate it with American Optimism and that 50 year span or so where the USA ruled the world as a unipolar power.
(Score: 2) by VLM on Monday November 06 2023, @12:52PM
Don't blame us, we have the highest rate of cord cutting.
https://www.statista.com/statistics/1359075/use-cable-tv-frequency-united-states-generation/ [statista.com]
I would theorize cable TV subscription is related pretty strongly to the pro-sports-nerd phenomena. The one where the average pro golf viewer is in their 70s and the average pro baseball viewer is in their 60s. ESPN and its expense is only a controversy for non-subscribers, the actual subscribers love it.
Overall its a technology built around a generation gap, like album art on LPs or collecting classic 60s cars.
(Score: 4, Informative) by VLM on Monday November 06 2023, @12:45PM
This will be looked back upon as this cycle's AOL - Time Warner merger.
They are WAY too late to the party and paying WAY too much.
8.61e9 / (48.3e6/3) = .......
Do they seriously think each individual in the subscriber base can finance $534.78
Supposedly in the quarter ending last June, Disney's gross profit margin was 35.19%
Put another way Hulu is not making a profit without accounting tricks, so they expect to raise $188.19 per subscriber per year? Note that Hulu's ad supported plan is only $79/yr...
(Score: 3, Insightful) by UncleBen on Monday November 06 2023, @06:55PM
The "consumer harm" standard rides again!!! All Dulu needs to is promise to NOT RAISE prices for 1 minute, and the entire FTC rolls over. I know Lina Kahn will have some excellent words on why this merger shouldn't happen, but the reactionary minoritarians will insure it goes forward.
Goddammit, I think I should just check out CDs from the local library. (Blockbuster 2.0.)