PHILADELPHIA -- Comcast Corp. agreed Tuesday to sell its 33 percent stake in online streamer Hulu to the Walt Disney Co. for at least $5.8 billion -- and perhaps billions more -- when a deal closes in five years, a strategic win for Disney in the global battle for eyeballs and one that Comcast will have to answer.
Tuesday's deal paves the way for Disney's full management control over prized, but money-losing, Hulu as Americans cut the cable-TV cord and migrate to online streaming services. And, Hulu's customer base of 28 million subscribers bolsters Disney's plans for a streaming service of its own with its hit movies and TV shows.
Comcast -- which is also threatened by cord cutters -- had few options but to sell its Hulu stake after losing a bidding war for Rupert Murdoch's 21st Century Fox to Disney in 2018. The Fox assets included a one-third stake in Hulu, boosting Disney's total ownership stake to 60 percent.
Comcast faced being a minority partner in Hulu and helping fund its growth, or cashing out and launching its own streaming service for millennials and young Americans. Comcast will earn a big profit on its estimated $2 billion investment in Hulu.
Comcast says it will launch a service through its NBCUniversal and Sky subsidiaries in 2020, though many details of that streaming service are not yet available. And though Comcast will continue to license This Is Us, Law & Order, and other NBCUniversal shows to Hulu for three years, it could pull them and put them on its own streaming service.
Analysts on Tuesday viewed the deal as good for both companies but noted that Comcast has been slow to respond to the streaming threat from Netflix and others because of huge profits it makes in cable TV.
"They don't have it all together at this point," Neil Begley, Moody's Investors Service senior analyst, said of Comcast's streaming plans.
"Comcast makes most of its money by selling cable bundles to consumers," Eric Haggstrom, an eMarketer forecasting analyst, said on Tuesday. "Disney makes money in a couple of different ways and is not as reliant on the traditional cable bundle. Given its deep content library, Disney is more well-equipped (than Comcast) to move to streaming as consumers are increasingly cutting the cord."
Disney CEO Bob Iger said in a statement: "We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of (Disney's) brands and creative engines to make the service even more compelling and a greater value for consumers."
NBCUniversal executives Jeff Shell, Matthew Bond, and Linda Yaccarino will step off the Hulu board as part of the deal, relinquishing management oversight immediately.