Disney takes over Hulu

Photo: The Canadian Press

Disney is taking full control of Hulu from Comcast, as both companies prepare to launch their own streaming services in response to declining audiences for traditional TV.

The companies said Tuesday that Comcast, which owns a third of Hulu, can sell its stake to Disney starting in 2024, for a minimum of $5.8 billion. Until then, Comcast will be a silent investor.

Hulu launched more than a decade ago as the major entertainment companies dealt with the rise of digital media. While YouTube became a home for digital video, Netflix built up a streaming library of back seasons of popular TV shows and movies, and Hulu made TV episodes from networks such as ABC, NBC and Fox available online after they aired on TV.

Hulu today still shows network TV episodes and original series for $6 a month. It has a newer, cable-like service with live TV channels for $45 a month.

In the past few years, many other streaming services have emerged, helping more people drop their cable subscriptions. These include ones from AT&T and Google that, like Hulu's live-TV service, compete with the traditional cable bundle. Others are more focused, like HBO Now.

Meanwhile, big media companies that own TV networks are looking to launch still more streaming services as a way to make up for revenue lost from fewer cable subscriptions.

Disney's deal with Comcast isn't surprising. Disney had already become the majority owner of Hulu when it absorbed Fox's stake as part of its purchase of Fox's entertainment businesses .

Having total control of Hulu gives Disney more power to support its own streaming efforts. The company is launching a new kids-focused streaming service called Disney Plus this year for $7 a month and is likely to offer discounted bundles with Hulu and its sports service, ESPN Plus.

Meanwhile, Comcast's NBCUniversal will debut a streaming service in 2020. And AT&T's WarnerMedia is launching its own streaming service, with a focus on HBO and other shows and movies owned by the company. There's also a new one from Apple, with original content.

An aftereffect of all these new services could be the fragmentation of content. You may have to pay for more streaming services to keep watching the same stuff.

Disney is planning to take back its library, which includes Pixar, Marvel and "Star Wars" movies, from Netflix for its own services. Other popular shows on Netflix, including "Friends" and "The Office," are owned by the big entertainment companies, and they may want to have them back for their own services. AT&T CEO Randall Stephenson said at an investors conference Tuesday that the company, which owns "Friends," will be "bringing a lot of these media rights, licensing rights back to ourselves" for its streaming service.