(Reuters) – Hulu is buying mobile operator AT&T Inc. ‘ s 9.5 percent of the shares in the AMERICAN entertainment-streaming service in a deal valued at $1.43 billion, the two companies said on Monday.
FILE PHOTO: The AT&T logo is pictured during the Forbes Forum 2017 in Mexico-City, Mexico, September 18, 2017. REUTERS/Edgard Garrido/File Photo
Hulu, which competes with Netflix Inc and Amazon.com’s Prime Video, has more than 25 million subscribers and is expected to lose $1.5 billion in the current fiscal year.
The deal means Hulu has a total value of approximately $15 billion – up from a reported $5.8 billion in 2016, when the Time Warner – now a part of AT&T – bought the ring. Netflix had a market capitalization of about $41 billion and is currently valued at $152 billion on Monday’s close.
The move gives the Walt Disney Co., which has a 60 percent stake in Hulu via a joint venture, more control of the company.
Comcast Corp’s nbc universal has a 30 percent of the shares. On the basis of the joint venture agreement, Disney and Comcast will decide on how they want the assignment of the purchased shares of AT&T.
It was unclear how the deal could affect the content on Hulu in the near future. AT&T is preparing for the launch of its own subscription streaming video service.
Hulu Chief Executive Officer Randy Freer said in a statement that “WarnerMedia continues to be a valued partner for Hulu for the next few years so we offer our customers the best of TV, live and on-demand, all in one place.”
AT&T has not responded to a Reuters request to comment on the structure of the deal.
The wireless carrier said that it would the proceeds of the deal to cut its debt, which stood at $176.5 billion at the end of 2018.
The company said in November it could consider selling its stake in Hulu and review of non-core assets in 2019.
Disney last week forecast Hulu’s subscribers to reach 40 million to 60 million by fiscal 2024 and profitable in the United States by 2023 or 2024.
Reporting by Vibhuti Sharma and Aishwarya Venugopal in Bengaluru; editing by Arun Koyyur and Rosalba O’brien