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Disney share price up 2% after taking total control of Hulu

The entertainment giant's stock rises after buying Comcast's shares of Hulu.

Mickey Mouse and Bob Iger after Disney takes control of Hulu Source: Bloomberg

Disney share price rose after Comcast sold its remaining shares of streaming service Hulu to the corporation for a guaranteed $5.8 billion. Disney’s takeover of Hulu is part of its strategy to build more of its digital media presence.

Why did Disney take over Hulu?

Disney chief executive officer (CEO), Bob Iger, noted that Hulu was part of Disney’s plan to add more popular adult-oriented direct-to-video content like ‘The Handmaid’s Tale’ to its entertainment roster. With Disney set to launch its own streaming service later this year, taking complete ownership of Hulu could help the corporation compete with rival Netflix.

The company recently reported that Hulu is outpacing Netflix with new customers. Hulu added 3.8 million new paid subscribers in 2019, while Netflix added 1.74 million new customers this year. Iger explained how Hulu would be integrated into Disney.

‘Hulu represents the best of television. 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.

As part of the deal with Disney, Hulu will stream Comcast’s content from NBC Universal until 2024. NBC Universal chief executive officer, (CEO), Steve Burke, touted the agreement with Disney.

‘The extension of the Hulu 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, as we build that business,’ said Burke.

How will Hulu benefit from Disney ownership?

Trip Miller, managing partner at Guillane Capital Partners and Disney shareholder, said that Disney being the sole owner of Hulu will bring more clarity to both corporations.

‘Hulu is the third leg of Disney's streaming strategy[after Disney+ and ESPN +]. Six months ago, you had four owners to the business and it was very complicated and confusing — so this brings about a lot of clarity and control of direction for Disney,’ said Miller.

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