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Disney struggles to carve out path for adult-oriented streamer Hulu

(Image: Hulu/Walt Disney Company/Handout, Graphic: The Desk)

The Walt Disney Company is slowing its international rollout of streaming service Hulu because of an agreement with Comcast over control of the service, according to a report.

Two years after Hulu launched in 2007, the company was in the unique position of being owned and operated by three rivals — NBC (later acquired by Comcast), ABC parent company Disney and Fox parent company News Corporation (later 21st Century Fox and now Fox Corporation). Each company had a 30 percent stake in Hulu, with the remaining 10 percent being traded among various media companies and private equity firms.

Disney gained an additional 30 percent stake in Hulu through its purchase of various media assets from 21st Century Fox, which was later renamed Fox Corporation. Disney agreed to acquire Comcast’s 30 percent stake last May. AT&T, Hulu’s minority stakeholder, sold its investment back to the company.

Under Disney’s purchase agreement with Comcast, Disney assumed immediate control over the streaming service with Comcast promising to sell its 30 percent share of Hulu in 2024. Comcast said it would continue to license movie and film content to Hulu until it sells back its stake of the service. Comcast has since launched its own streaming offering called Peacock, and Disney has rolled Hulu into a bundle with two other streaming services its operates, Disney Plus and ESPN Plus.

Since taking control of the company, Disney has expanded Hulu’s library to include content from the Fox television and film studios. The service has placed a heavy emphasis on cable TV content from pay networks FX, FXX and Freeform, all of which are owned by Disney.

Earlier this year, executives at Hulu encouraged their counterparts at Disney to launch a global variant of the streaming service with that same pay TV content. Disney executives were initially receptive to the idea but soon cooled on the plan after realizing Hulu’s success could mean the company would have to shell out more for Comcast’s 30 percent stake.

Those conversations were reported by Bloomberg on Friday based on interviews conducted with sources who were not identified.

One analyst interviewed by Bloomberg said Hulu’s success could give Disney some heartburn because the more people sign up for the service, the more valuable it becomes – and the more Disney has to pay to buy Comcast out.

“I’m not sure they want to do [that],” Michael Nathanson, an analyst who specializes in the media industry, told Bloomberg. “If I was them, I’d be really leery of creating more value right now.”

As of September, Hulu had logged more than 35.5 million sign-ups. But that pales in comparison to Disney Plus’ 60.5 million subscribers, which could be attributed to both Disney’s decision to roll the service out internationally and invest more in its marketing.