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Hulu… by Disney; Comcast Becomes Passive Partner in Streaming Service

Phillip Dampier May 14, 2019 Comcast/Xfinity, Competition, Consumer News, Disney+, Hulu, Online Video 2 Comments

Effective today, Hulu is now under the full control of the Walt Disney Company, ending a decade of a sometimes-uneasy partnership between rivals NBC-Universal, 21st Century Fox, Disney-ABC and Time Warner (Entertainment).

This morning, Disney and Comcast, the last two partners in the streaming venture, reached an agreement that will give full operational control of Hulu to Disney, in return for either company having the right to force Disney to buy out Comcast’s remaining 33% interest in the service beginning in 2024. In effect, with Comcast giving up its three seats on Hulu’s board and its veto power, the cable company now becomes a passive partner in the venture. At a Disney-guaranteed value of at least $27.5 billion five years from now, Comcast could eventually walk away from Hulu with at least $9 billion in compensation.

Today’s agreement means Disney will own and control multiple streaming services. Disney today announced it has big plans for Hulu, despite preparing to launch its own Disney+ streaming service and already operating its own streaming platform for ESPN. Disney CEO Robert Iger said Disney+ will now be focused on kids and family-friendly entertainment, while Hulu will be Disney’s platform for adult-focused movies and series. Disney’s recent acquisition of the 20th Century Fox content library and FX’s suite of cable channels gives it plenty of additional content to bring to both of its general entertainment streaming services.

To make sure of a smooth transition, both companies have agreed to a lucrative extension of Hulu’s license to stream NBC-Universal content and networks, as well as a retransmission consent agreement to allow Hulu Live to continue carrying NBC-Universal networks and TV channels until the end of 2024. That will deliver a significant revenue boost to Comcast, which can use the money to help build its own forthcoming streaming platform, launching in 2020.

“We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers,” said Iger in a statement.

NBC-Universal chief executive Steve Burke said in a statement that the deal is “a perfect outcome for us” because the “extension of the content-licensing agreement will generate significant cash flow for us, while giving us maximum flexibility to program and distribute to our own direct-to-consumer platform.”

For consumers, Iger is expected to consider offering a discounted bundled package to Hulu subscribers who also sign up for Disney+. With a combination of Hulu and Disney+, Netflix’s biggest U.S. rival is about to get considerably bigger.

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Josh
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Josh

This is just beyond bizarre. I don’t know what to think about it.

Well, I e got Hulu until my $1 monthly promo runs out 😕

Hulu’s original mission seemed far too sensible to last.

Still a good service, for now, and way cheaper than Netflix.

Doug
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Doug

Cheap streaming options (and those low prices everyone loves) are the industry’s way to get “cord-nevers” to pay for some type of pay television, since they aren’t consuming PayTV the same way their parents did. Now parents and cord-cutters, moving to the OTT streaming services, exacerbates big media’s future revenue problems.

So what do they do? They’ll consolidate and raise prices to turn the OTT Streaming services into what traditional payTV is today.

You don’t think big media is going to accept a decline in revenue, do you?

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