How Disney Gained Full Control of Hulu—and What That Means

Disney has entered into a somewhat complicated agreement with Comcast that could mean big things for the future of TV.

May 14, 2019

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Well, it’s official. On Tuesday, Disney and Comcast jointly announced that Disney will seize full operational control of Hulu, effective immediately. Following its acquisition of Fox, Disney had controlled a majority of stakes in Hulu—but until today, a third of the company was still under the stewardship of Comcast. Within five years, the agreement stipulates, Comcast can require Disney to buy out its share of Hulu for a minimum price of $5.8 billion—but Disney can also compel Comcast, which owns its 33 percent share through its acquisition of NBCUniversal, to sell for its fair market value on that same timeframe.

Under the new deal, Hulu will still be home to its library of licensed NBCU content through 2024, and will continue to offer NBCU on its live TV service at an inflated price. But NBCU also has the option to pull most of its content from Hulu in three years—and all of the content Hulu is currently licensing will also be available on NBCU’s own streaming platform, which is set to launch next year. (If that happens, the fee Hulu pays to license said content will decrease.)

Hulu’s ownership situation has been complicated from the start. As The Hollywood Reporter notes, the streaming service—originally an online home for currently running television programs—began in 2008 as a collaboration between News Corp. and NBCUniversal, which Comcast did not own at the time. Disney bought in later, in 2009. After that, the company’s ownership was split four ways: NBCUniversal, 21st Century Fox, and the Walt Disney Company each held 30 percent of Hulu, while Time Warner owned the other 10 percent.

Then Comcast bought NBC, and AT&T acquired Time Warner. But it was Disney’s acquisition of Fox, completed in March of this year, that came as the most seismic shift of all. That merger meant that for the first time, just one company owned a majority stake in Hulu. When AT&T sold its own share in the service earlier this year, many took it as the death knell of a collaboratively owned Hulu, speculating that Disney would likely buy Comcast out.

So, what does this all mean for people who just want to be able to watch their favorite shows without subscribing to 80 different streaming services? Well, Disney will likely expand Hulu internationally. Otherwise, the company has two obvious options. Disney could use Hulu as the foundation for its upcoming streaming service, Disney+, essentially transforming an existing site into its own proprietary platform. But it seems more likely that Disney will go another route, keeping Hulu separate from Disney+ and instead using it as the home for content that does not necessarily seem compatible with the Disney logo. Disney does, after all, now own a lot of old Fox films and projects that it might want to keep separate from the family-friendly fare that more closely aligns with its brand identity.

The biggest question going forward will be whether NBCU plans to pull its offerings from Hulu in a few years, in order to make them exclusively available on its own platform. We already know that the upcoming NBCU platform will be free to all paying TV subscribers; sources tell CNBC that Disney’s competitive price of $6.99 per month has led NBCUniversal to reconsider its own planned price point of roughly $12 per month for cord-cutters. Hulu certainly has a wide enough array of content that losing NBC’s shows won’t necessarily be a complete, immediate catastrophe—but considering the popularity of series like 30 Rock and Seinfeld, it would still be a big blow. And for consumers, the move might mean having to decide exactly how many streaming subscriptions is enough.

Laura Bradley