Hulu Valuation Jumps As AT&T Sells Stake -- WSJ
April 16 2019 - 3:02AM
Dow Jones News
By Drew FitzGerald
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 16, 2019).
AT&T Inc. sold its minority stake in Hulu back to the
company in a deal that values the streaming video site at around
$15 billion, a sharp jump from more than two years ago.
Hulu, which is now owned by two major media companies, has been
trying to build a service that can rival Netflix Inc. and other
streaming services that are competing for the attention of
television watchers.
AT&T inherited its stake when it acquired Time Warner Inc.
and had said it planned to sell its position to focus on its own
streaming service, which it plans to launch this year. On Monday,
AT&T said it sold the 9.5% stake for $1.43 billion.
The valuation is a sharp jump from the $5.8 billion Hulu fetched
when Time Warner bought the stake in 2016, but is still dwarfed by
Netflix, which has a market capitalization of roughly $150 billion.
Hulu has been adding subscribers rapidly and ended 2018 with more
than 25 million, while Netflix has reached 139 million.
Hulu is managed by Walt Disney Co., which owns a roughly 60%
stake after acquiring shares held by 21st Century Fox Inc. along
with other TV and film assets. Comcast Corp. holds a 30% share in
the business.
Disney and Comcast will have to negotiate how to divide the 9.5%
stake that the joint venture acquired, a Hulu spokeswoman said.
AT&T told investors it would whittle down debt after it
spent more than $80 billion to acquire Time Warner, a deal that
left the cellphone carrier and pay-TV distributor with more than
$170 billion of net debt at the end of 2018. The deal also made the
Dallas company a direct competitor of Disney and deepened its
rivalry with Comcast, which owns media giant NBCUniversal.
AT&T's WarnerMedia, as the film-and-TV unit is now called,
is developing a new on-demand video service similar to Hulu's to
house new titles like "Aquaman" and popular reruns like
"Friends."
Executives haven't disclosed the name of the product or how much
it will cost, though plans call for a three-tiered service built
around WarnerMedia's HBO TV series with added content from its
Warner Bros. studios and cable-TV brands. The untitled service is
scheduled to launch at the end of this year.
Disney last week unveiled Disney+, another subscription service
to hold content from the "Star Wars" franchise, Marvel movies and
classic animated films.
But the Mickey Mouse company plans to offer more mature
programming through Hulu while centering its sports assets around
ESPN+.
It is unclear how the new ownership will affect which shows Hulu
will keep in its library.
WarnerMedia executives have said the company won't make all its
content exclusive and will license the rights
opportunistically.
In a statement Monday, Hulu Chief Executive Randy Freer said
"WarnerMedia will remain a valued partner to Hulu for years to come
as we offer customers the best of TV, live and on demand, all in
one place."
In January, Hulu lowered the price of its basic plan, which lets
users stream TV shows with ads but doesn't include live sports and
news. It also raised the cost of its live TV offering, joining a
trend that has lifted the price of traditional channels across the
media industry.
The basic plan now costs $6 a month, while Hulu + Live TV costs
$45 a month.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
April 16, 2019 02:47 ET (06:47 GMT)
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