Will Merger Deal Kill Hulu?
by EG
Business deals are usually very difficult for most of us to understand, but as Disney and Comcast fight over who gets to buy 21st Century Fox, one thing is clear: Hulu is going to have to deal with the aftermath. At the very least, the streaming platform is going to look very different, no matter who wins the battle, and its existence as we know it may be in danger. Read on for details.
The showdown between Comcast and Disney to acquire 21st Century Fox will have a major effect on the future of Hulu.
Since each of the three companies currently owns a 30 percent stake, whichever wins Fox could take control of the over-the-top service, which on May 2 revealed that it had crossed the 20 million subscriber mark. AT&T's WarnerMedia holds the remaining 10 percent stake.
Disney has been keen on rivaling Netflix by seizing command of Hulu in its Fox deal and using the acquisition to beef up the content for its own streaming service. Comcast, meanwhile, also stands to benefit from possibly controlling the video streamer in the age of cord-cutting.
"While only worth approximately $8 billion, or 9 percent of the total Fox/Sky transaction, [Hulu] may in fact be the
most important asset within it," said Macquarie Capital analyst Tim Nollen in a recent report. "Hulu is Comcast’s only direct-to-consumer option in the U.S., and seeing Disney gain majority control would weaken its hand in this further – it would be worse for Comcast to be a 30 percent minority owner of an asset with a majority owner than to be one of a consortium of minority owners."
"The combination of content of Hulu, Sky's Now TV and Hot Star in India would leave Comcast well positioned in the global OTT market," Jefferies analyst John Janedis says. Meanwhile, for Disney, "we think Hulu is also an 'important to have' if not a 'must-have' – for the same reason as it is for Comcast," argued Nollen.
So much is at stake in the showdown for Fox that would shape the streaming video future of the Hollywood giants bidding for it, but analysts say that the rights of minority owners of Hulu aren’t fully known, which could be a wildcard. Said Pivotal Research Group analyst Brian Wieser: “I think the minority owners may have some veto rights that we don’t know everything we might want to know about.”
Some reports have suggested that Comcast and Disney if one of them wins Fox could be willing to sell Fox's 30 percent share in Hulu while keeping its own stake to help seal a mega-deal if regulators require it.
Get the rest of the story at The Hollywood Reporter.
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