Disney (NYSE:DIS) is poised to take full ownership of Hulu by purchasing Comcast (NASDAQ:CMCSA)'s 33% stake for at least $8.61 billion, as part of an agreement made in 2019. The final buyout price will be determined via an appraisal process due next year. This development comes on the heels of Comcast's decision to channel its shows to its Peacock service.
Hulu, boasting 48 million subscribers, offers programming from networks such as ABC and original series including "Only Murders in the Building". Disney's acquisition aligns with its strategy to boost its streaming ambitions. The plan is to integrate Hulu content into Disney+ for US subscribers, creating a "one app experience." Despite this, Hulu will continue as an independent product offering ad-free access at $18 and ad-supported access at $8.
Disney initially gained control over Hulu following its acquisition of 21st Century Fox's entertainment assets in 2019. However, this has not alleviated investor concerns about streaming profitability and the decline of traditional TV. As a result, Disney's shares have fallen to around $81 from $197 two years ago.
In a bid to address these concerns, Disney is considering selling a stake in ESPN, its holdings in India, the Freeform cable channel, and a chain of local TV stations. This potential move indicates Disney's focus on strengthening its digital footprint while divesting from traditional television assets.
InvestingPro Insights
As per InvestingPro's real-time data, Disney currently boasts a market cap of $148.05B. Furthermore, the company's P/E ratio stands at 65.7, indicating a high earnings multiple, thus aligning with one of our InvestingPro Tips that the company is trading at a high earnings multiple.
In terms of revenue, Disney has managed to generate $87.81B over the last twelve months as of Q3 2023, with a growth rate of 8.26%. However, it's worth noting that according to another InvestingPro Tip, the company's revenue growth has been slowing down recently.
InvestingPro Tips also suggest that Disney has raised its dividend for 10 consecutive years, underlining its position as a prominent player in the Entertainment industry. Despite trading near its 52-week low, the company operates with a moderate level of debt and analysts predict the company will be profitable this year.
For those seeking more detailed insights and tips on Disney or any other company, consider exploring the InvestingPro product that includes additional tips. Currently, InvestingPro lists nine more tips that could provide a more comprehensive understanding of Disney's financial health and market position.
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