DISNEY PAID BILLIONS FOR HULU AFTER SPENDING YEARS COMPETING WITH IT
Disney didn't create Hulu. It spent years building its own streaming strategy while Hulu was already becoming a major player. Then Disney eventually decided it needed Hulu too.
In 2023, Disney paid Comcast approximately $8.61 billion for the remaining 33% of Hulu.
That gave Disney full ownership.
But the strange part is what happened before that.
For years, Disney and Hulu existed in the same increasingly competitive streaming market.
Eventually, Disney went from being a participant in Hulu to owning the entire thing.
HULU STARTED BEFORE DISNEY+
Hulu launched in 2007 as a streaming service built around television content.
Disney joined Hulu in 2009.
At the time, streaming was still very different from what it is today.
Netflix was growing.
YouTube was exploding.
Traditional television companies were trying to figure out what the internet meant for their businesses.
And Hulu was becoming one of the places where television content could live online.
DISNEY DIDN'T OWN HULU
This is the part that makes the story interesting.
Hulu was originally backed by multiple media companies.
Disney eventually became one of its owners, alongside companies including Comcast and 21st Century Fox.
But Disney didn't have complete control.
There were other shareholders.
Other interests.
Other strategies.
And then Disney decided to build something of its own.
DISNEY+ ARRIVED
In November 2019, Disney launched Disney+.
Suddenly, Disney had its own major streaming platform.
And the content strategy was obvious.
Disney+ could focus heavily on Disney's enormous collection of family entertainment, Pixar, Marvel, Star Wars and other major franchises.
But Hulu had something different.
It was designed around general entertainment.
TV series.
Movies.
Adult-oriented programming.
Original shows.
And eventually live television.
So Disney had two very different streaming identities.
Disney+
↓
Disney, Pixar, Marvel, Star Wars and family entertainment
Hulu
↓
General entertainment and television
That difference would become extremely valuable.
THEN DISNEY BOUGHT 21ST CENTURY FOX
In 2019, Disney completed its acquisition of 21st Century Fox's entertainment assets.
The deal dramatically changed Disney's position in Hulu.
Disney emerged with approximately 67% ownership of Hulu, while Comcast retained the remaining 33%.
And Disney didn't just receive a bigger ownership percentage.
It received operational control.
COMCAST STILL OWNED A THIRD
This created an unusual arrangement.
Disney controlled Hulu.
But Comcast still owned 33%.
In May 2019, Disney and Comcast agreed that Disney would assume full operational control while establishing a future put/call arrangement.
Eventually, one side could trigger the sale of Comcast's stake.
They also established a $27.5 billion minimum total equity value for Hulu under the agreement.
So Disney was effectively running a company while knowing that one day it might have to buy the remaining third.
THEN THE BILL CAME
In November 2023, Comcast exercised its right to require Disney to purchase its Hulu stake.
Disney announced that it expected to pay approximately:
$8.61 billion
for Comcast's 33% interest.
That figure represented Comcast's share of the previously agreed $27.5 billion minimum valuation, adjusted for outstanding capital contributions.
Disney now owned:
100% of Hulu.
WHY WOULD DISNEY PAY BILLIONS FOR SOMETHING IT ALREADY CONTROLLED?
Because control and ownership aren't the same thing.
For years Disney could operate Hulu.
But Comcast still had an economic claim on the business.
If Hulu became more valuable, Comcast would benefit too.
By buying the remaining stake, Disney removed that ownership split.
The company could make Hulu part of its long-term streaming strategy without another shareholder sitting on 33% of the asset.
AND HULU HAD BECOME BIG
By September 2023, Disney reported approximately 49 million paid Hulu subscribers.
Hulu generated revenue primarily through subscriptions and advertising, and also offered live television and premium add-on services.
So Disney wasn't buying an abandoned streaming website.
It was buying complete ownership of an established subscription and advertising business with tens of millions of customers.
THEN DISNEY STARTED BLENDING THE SERVICES
The distinction between Disney+ and Hulu increasingly became less rigid.
Disney could offer customers combinations of:
Disney+
Hulu
ESPN+
Instead of forcing consumers to choose between completely separate entertainment ecosystems, Disney could bundle them.
Hulu could also provide Disney with a home for programming that didn't naturally fit the Disney+ brand.
That's strategically useful.
THE STRANGE PART ABOUT THE STORY
Disney spent years in a world where:
Hulu was one streaming platform.
Then Disney built:
Disney+.
Then Disney became Hulu's majority owner.
Then Disney bought the remaining stake.
So the company that once had to share Hulu with other media giants eventually decided:
"We want all of it."
THIS IS ALSO A STORY ABOUT COMPETITION
When Disney+ launched, Disney wasn't simply entering a market full of unknown startups.
It was entering a market containing services that Disney already had relationships with.
Netflix was already enormous.
Amazon had Prime Video.
Hulu already had millions of viewers.
Disney therefore had to decide something important:
Should it compete with Hulu, cooperate with Hulu, or eventually own Hulu?
The answer changed over time.
SOMETIMES THE COMPETITOR BECOMES AN ASSET
This happens in many industries.
A company can initially view another business as:
competition
↓
then
partner
↓
then
investment
↓
then
acquisition target
The economics change.
What once looked like a rival can eventually become more valuable inside your own ecosystem.
Disney's Hulu journey is an unusually clear example.
THE BUSINESS LESSON
Disney didn't need Hulu to become Disney.
Disney already had some of the world's strongest entertainment brands.
But Hulu gave Disney something different:
an established general-entertainment streaming platform with a large customer base, advertising business and television ecosystem.
Disney+ and Hulu could therefore serve different purposes while sitting under the same corporate owner.
The strategic question wasn't simply:
"Which streaming service wins?"
It became:
"How many streaming businesses do we actually want to own?"
MAACAT PERSPECTIVE
The most interesting part of the Hulu story isn't that Disney spent $8.61 billion.
It's that Disney's relationship with Hulu changed completely over time.
First:
Disney joined Hulu.
Then:
Disney became its majority owner.
Then:
Disney took operational control.
Finally:
Disney bought the remaining 33%.
What started as a shared streaming business eventually became a wholly owned asset.
And sometimes that's how acquisitions happen:
You don't buy the whole company on day one.
You spend years getting closer to it — until eventually owning all of it makes more sense than sharing it.
