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Hulu spend $1.43 billion to buy back AT&T stake, values the streaming service at $15 billion

(Reuters) – Hulu has bought back mobile provider AT&T Inc. interest in the AMERICAN entertainment-streaming service for $1.43 billion, in a deal that values Hulu at $15 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

The sale of AT&T’s of 9.5 percent of the shares to Hulu in a cash deal 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 stake in Hulu. On the basis of the joint venture agreement, Disney and Comcast will decide how they want to allocate the purchased shares of AT&T.

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.

Hulu is the total value has increased from an average of $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. Based on Monday’s stock market closing price, Netflix is valued at $152 billion.

AT&T, that the preparation for the launch of its own subscription streaming video service later this year, said that the unit WarnerMedia would continue to work with Hulu to deliver content on the platform. It gave no further details.

“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,” Hulu Chief Executive Officer Randy Freer said in a statement.

AT&T said that it would the proceeds of the deal to reduce 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.

The transaction did not require any governmental or other third-party approvals and was simultaneously signed and closed, Hulu and AT&T said.

Disney last week forecast Hulu’s subscribers to reach 40 million to 60 million by fiscal 2024 and the company profitable in the United States by 2023 or 2024.

Reporting by Vibhuti Sharma and Aishwarya Venugopal in Bengaluru; editing by Rosalba O’brien and Leslie Adler

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