Hulu Valuation Jumps As AT&T Sells Stake -- WSJ

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 [e-mail]

(END) Dow Jones Newswires

April 16, 2019 02:47 ET (06:47 GMT)

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