According to The Information, Comcast has stopped funding the daily operations of Hulu, the money-losing SVOD service in which it owns a 33% stake. Comcast is said to be currently in arbitration with the majority owner, Disney, over the subscription platform’s valuation.
Hulu was launched in 2007 as a joint venture between Disney, Fox, and NBCU, before the latter’s 2001 acquisition by Comcast, mainly as a digital repository for linear network TV shows.
The erstwhile Time Warner Inc. later joined the JV as a 9.5% owner, paying $583 million to do so in 2016.
Disney acquired Fox’s 30% share in Hulu, in 2019, as part of its $71.3 billion purchase of Fox’s entertainment assets.
Also, the same year, when AT&T closed its $85 billion acquisition of Time Warner, the telecom sold back its 9.5% stake to the joint venture for $1.43 billion, valuing Hulu at around $15 billion at that time.
With its stake restored to 33%, Comcast agreed with Disney, settling down so that it could compel Disney to buy out its remaining share in 2024 at a minimum Hulu valuation of $27.5 billion.
Amid the pandemic, Disney picked not to pursue a previously planned international expansion plan for Hulu and instead opted to pursue foreign growth for Disney Plus through India’s Hotstar.
Comcast is furious about Disney’s decision not to expand Hulu’s international presence. The cable mixture, which controls 33% of Hulu through its NBCUniversal media division, believes that Disney is limiting the growth of Hulu at the international level.
Disney is doing so to reduce the amount it will have to pay Comcast three years from now when Comcast can compel Disney to buy out its share in the joint venture.
Disney has tied up Hulu along with Disney Plus and ESPN Plus since 2019. As a result, Hulu has 41.6 million subscribers now, whereas, in 2018, it had only 22.8 million subscribers.
It was widely been expected given Disney’s strategic push into streaming and its description of Hulu as one of “three legs of the stool” along with Disney+ and ESPN+.
The $7 price point of Disney+ and the lowering of Hulu’s basic, ad-supported service to $6 a month are both noteworthy moves in an industry-wide bid to slow the momentum of Netflix.