Hulu now valued at $15 billion
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Hulu is now valued at $15 billion following the company’s repurchase of a 9.5% stake owned by AT&T. The telecommunications giant received $1.43 billion for its stake in the video streamer. Before the deal was announced, entertainment giant Disney owned 60% of Hulu via a joint venture. Comcast’s NBC Universal unit owns 30% of Hulu. Both Disney and Comcast will decide how to split up the chunk of equity that was just bought from AT&T.
AT&T acquired the 9.5% ownership of Hulu when it purchased Time Warner last year. The company said that it plans on using the proceeds of the sale to pay down some of the $176.5 billion in debt on its books as of the end of last year. Because the deal did not require regulatory approval, it has already closed. Based on the price paid for AT&T’s 9.5% stake in Hulu, the latter has risen in valuation from $5.8 billion in 2016 to $15 billion. During the same time period, Hulu competitor Netflix has seen its value explode from $41 billion to $152 billion. Disney expects Hulu to turn a profit by 2023, and have 40 million to 60 million subscribers by fiscal 2024.
“Warner Media will remain a valued partner to Hulu for years to come as we offer customers the best of TV, live and on demand, all in one place.”-Randy Freer, Chief Executive Officer, Hulu.
Even though Disney owns a majority of Hulu, it’s not stopping the company from launching Disney+ this coming November. Priced at $6.99 per month, the service will feature 500 films from the Disney library along with 7,000 episodes of television shows from the Disney Channel and some original programming.
Questions & Answers
Q.How will the 9.5% stake repurchased from AT&T be distributed among the remaining owners?
How will the 9.5% stake repurchased from AT&T be distributed among the remaining owners?
Both Disney and Comcast, the remaining owners of Hulu, will decide how to divide the 9.5% equity stake that was recently bought back from AT&T.
Q.What is AT&T's reason for selling its stake in Hulu?
What is AT&T's reason for selling its stake in Hulu?
AT&T stated its intention to use the proceeds from the sale of its Hulu stake to reduce some of the $176.5 billion in debt it had on its books at the end of last year.
Q.When did AT&T originally acquire its ownership in Hulu?
When did AT&T originally acquire its ownership in Hulu?
AT&T obtained its 9.5% ownership of Hulu when the company completed its acquisition of Time Warner during the previous year.
Q.Despite owning a majority of Hulu, is Disney launching a competing service?
Despite owning a majority of Hulu, is Disney launching a competing service?
Yes, Disney is launching its own streaming service called Disney+ this coming November, priced at $6.99 per month, even though it holds a majority stake in Hulu.
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