Disney could sell their shares of Hulu, as the company is set to cut $5.5 billion in costs.
Disney has been making a ton of moves lately, which include massive layoffs and announcing sequels to some of its biggest movies (Toy Story, Zootopia). However, now that former CEO Bob Iger is back as the reigning man of the House of Mouse, he has revealed the company might be keen on selling its biggest streaming service. According to Iger, “Hulu, by the way, is a very successful platform and I think a good consumer proposition, but everything is on the table right now.”
Bob Iger was speaking during the earnings report from Disney when it was revealed that there are big plans in motion for the company, which may include selling Hulu. Currently, Disney owns 2/3 of the shares for Hulu, with Comcast owning the final 1/3. Per the original purchasing deal, Comcast could allow their buyout of Hulu as early as January 2024, which would lead to Comcast making $9.17 billion.
Disney could also choose to sell their shares of Hulu and walk away with a staggering $21.7 billion in equity, which could be the route to go currently. Bob Iger has been reportedly trying to cut at least $5.5 billion in costs from the company, which is why layoffs and downsizing have been happening at the company. Selling off shares of Hulu would fix that issue and bring in a ton more equity value for the company.
Trian Management CEO, Nelson Peltz, was also attempting to force his way on the board for Disney. Peltz and Trian invested some $500 million into Disney and were lobbying for him to join the board, though the fight to do so has officially ended. Peltz stated that Disney is now doing what Trian wanted them to do all along, so there will be no fighting any longer, though we are not sure if selling Hulu shares will cause more fighting amongst investors.
Nelson Peltz has long criticized the succession plans at Disney, which ultimately led to Bob Chapek being fired and Bob Iger returning to the fold. The shakeup at Dinsey could be why Peltz was attempting to get on the board of investors, though that does not seem to be the case any longer. Iger’s earnings call was to put investors at ease, as the plan to cut the $5.5 billion in costs, leading to a return of dividends to investors in 2020.
It does seem a bit odd that Disney would be willing to get rid of a streaming service that is so highly profitable, but it could be because Hulu is not as lucrative for the company as many think. Selling at least 1/3 of their shares would bring in at least $10 billion, which would go far in settling the monetary issues that Disney has been facing.
The erosion of the stock prices for Disney is what has led to many investors likely not being all too pleased with the company right now, but it appears that selling Hulu could help to alleviate some of those concerns. Also, it does make sense as to why Disney is now trying to push out sequels to some of their biggest releases, as they are bonafide money-makers.