Disney In Talks To Acquire WarnerMedia's 10% Stake In Hulu

A new report says Disney is currently in talks with WarnerMedia to acquire the company's 10% stake in Hulu, confirming a rumor that circulated late last year. Find out what that acquisition would mean as we head into an entertainment future which will seemingly be dominated by streaming services.

Variety reports that Disney is in "active discussions" with WarnerMedia's parent company AT&T to purchase the 10% of the streaming platform that Warner still owns. Hulu was founded as a joint venture between several major media companies. Right now, Disney owns 30%, 21st Century Fox owns 30%, Comcast (NBCUniversal) owns 30%, and AT&T (WarnerMedia) owns 10%. As soon as the Disney/Fox acquisition receives the regulatory approval it needs (which could happen any day now), Disney will own most of 21st Century Fox's assets – including its stake in Hulu, giving the Mouse House a 60% overall share in the streamer.

Now Disney is angling for an even higher percentage and seems to ultimately have its eye on owning the entire thing outright. Previous reports suggested that they would make a play for Comcast's remaining 30% of Hulu, something Comcast CEO Steve Burke has confirmed but resisted:

"Disney would like to buy us out. I don't think anything's going to happen in the near term."

Here's why Disney cares about Hulu:

Bob Iger, The Walt Disney Company's CEO, has talked openly about his desire to increase investment in Hulu, particularly on the programming side of things. Taking a page out of Netflix's playbook, if Hulu can create more programming that appeals to international audiences, they'll be able to boost their global subscription reach – something Iger certainly wants to see happen under his purview.

Part of the plan, at least the way it's been described in the press thus far, is for Hulu to be a hub of programming that targets a more adult audience, whereas Disney+ will consist of mostly family-friendly fare. By keeping a separation between the two, Disney lowers the risk of diluting the brand they've spent so many decades building.

There's no word yet on how much Disney would pay for WarnerMedia's 10% stake in Hulu, though Variety crunched some numbers in their report:

Disney last summer pegged Hulu's fair value at $9.296 billion after the 21st Century Fox deal closes, including an implied control premium of $1.246 billion. The $930 million implied value of WarnerMedia's stake is a 16% premium over Time Warner's original $583 million investment in Hulu in August 2016 plus its subsequent $200 million capital contributions to the streamer.

Maybe owning 10% of Hulu (which currently has around 25 million subscribers) simply isn't worth Warners' effort at this point. They're about to launch their own streaming service later this year, so maybe the thinking is that they can make some money from a rival, cut ties with a venture they don't have that much power over anyway, and concentrate their efforts on building a subscriber base for their own product. We'll update this article if the two companies end up striking a deal.