Disney is getting closer to owning Hulu – The Motley Fool

For months, speculation has swirled that AT & T (NYSE: T) would sell its stake in the popular Hulu video streaming platform. The telecommunications and media giant was the owner of 9.5% of Hulu's capital following the acquisition of Time Warner last year, a transaction that significantly increased Ma Bell's debt. Elsewhere in mega-media, Disney (NYSE: DIS) has just completed its own acquisition of Twenty-First Century Fox's entertainment assets, giving it a majority stake in Hulu.

AT & T just pulled the trigger to sell its stake.

Pay off the debt

AT & T and Hulu announced yesterday that they have reached an agreement to sell their minority stake in Hulu. The transaction values ​​Hulu at $ 15 billion, which means that AT & T received $ 1.43 billion for its 9.5%. Approvals from the government or third parties were not necessary and the agreement was immediately concluded at the time of signing.

"We thank AT & T for their support and investment over the past two years and look forward to future collaboration, and WarnerMedia will continue to be a valuable partner for Hulu for years to come by offering its customers Best TV, live and on demand in one place, "said Hulu CEO Randy Freer in a statement.

T Total long-term debt data (quarterly) by YCharts.

AT & T said it would use the proceeds of the sale to pay off its $ 176.5 billion debt at the end of 2018.

Two stockings, one to go

Hulu was originally created as a joint venture between Disney, Time Warner, Fox and Comcast (NASDAQ: CMCSA). Two of these partners have now sold their stakes in one way or another, leaving only Disney and Comcast. After the release of AT & T, Disney now owns two-thirds of Hulu, with Comcast owning the remaining third. Given Hulu's current valuation, Comcast's stake is $ 5 billion.

Disney has made it clear that it hopes to consolidate its growing portfolio of over-the-top (OTT), ESPN + and Disney + streaming services. The Mouse House finally announced details about Disney + last week, saying its price would be aggressive, just $ 7 a month. Hulu recently reduced the price of his most popular plan to $ 6 a month. In an interview with Bloomberg just days after the Disney + unveiling, CEO Bob Iger spoke about the consolidation and buyout of partners:

Hulu, we always have minority partners and everything we do with Hulu needs to be done with them in mind. So the consolidation would be something we could propose to Hulu management and the board, but that would require approval [of minority partners]. But we think that there will be consumers who want all three and we want to eventually allow a consumer to buy all three.

When he was asked directly to buy everything Hulu, Iger replied, "We'll see, we've discussed this possibility with both partners, but it's still a bit early to speculate." Maybe it was not too early to speculate after all.