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The video-streaming service Hulu is controlled by Walt Disney, Comcast and Twenty-First Century Fox. The setup has never been ideal, and the strain may soon force ownership into the hands of one media major.
On Wednesday, Fox agreed to sell its 39 percent stake in Sky, after Comcast won a jaw-dropping auction that attached a $40 billion market value to the British broadcaster.
Disney blessed the decision. The Mouse House is about to buy Fox’s entertainment and international assets, including the Sky stake, for $71 billion. Disney’s chief executive, Bob Iger, has allowed discretion to conquer any ideas of valor: He plans to use the $15 billion windfall from the sale to pay down debt and invest in direct-to-consumer products, including Hulu.
The Fox deal includes its 30 percent share of Hulu, which will bring Disney’s ownership up to 60 percent. Comcast holds 30 percent, while AT&T has a 10 percent interest following its acquisition of Time Warner. Disney wants the service to be a vehicle for more mature entertainment, while developing another for its family-friendly fare.
It will all be tougher if Comcast remains an owner. Earlier this month, the cable-TV group, led by Brian Roberts, appointed three directors to Hulu — its first active involvement since being sidelined for seven years by a deal struck with the U.S. government when it bought NBC Universal. That may signal its intent to hang onto the slice.
But Disney will end up calling most of the operational shots. And in exchange for having a puny say, Comcast will have to pay up. Hulu is valued at around $9 billion, according to Disney’s filings with the Securities and Exchange Commission. But it lost nearly $1.5 billion in the year to June, extrapolating from Fox’s disclosures about its share of losses.
Mr. Roberts might be tempted to stick around and poke Disney. There is a storied history between the two: He made an abortive hostile run at the Magic Kingdom more than a decade ago.
But Mr. Iger’s decision to exit Sky was probably the most sensible call of this saga so far. For similar reasons, if on a much smaller scale, selling Comcast’s stake in Hulu to Disney before too long may be Mr. Roberts’ wisest choice.
Jennifer Saba is a columnist at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.
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