Disney (DIS) is facing a rapidly approaching deadline on its ownership of Hulu.
And CEO Bob Iger suggested this week the company could end up selling the streaming service after saying "everything was on the table" regarding its stake in Hulu.
Disney currently owns two-thirds of the streamer with Comcast’s Universal (CMCSA) controlling the rest.
Under the terms of the joint ownership agreement, Comcast could require Disney to buy out its stake in Hulu as early as January 2024 at a guaranteed minimum equity value of $27.5 billion (or about $9.2 billion for the 33% stake.)
“There's really no choice here about the short term action with Hulu,” Bank of America analyst Jessica Reif Ehrlich told Yahoo Finance Live this week.
The analyst, who noted she does believe Comcast is a buyer, questioned what would happen if Disney were to sell.
“If [Disney] chose to go that the route of selling Hulu, what does that mean?" Ehrlich added. "Is it Hulu the service, what content goes along with it? Does it include FX? Does it include the Fox movies? It's not defined as to what what would go with Hulu.”
During the company's latest earnings call on Wednesday, Iger doubled-down on the view streaming was his "top priority" for Disney, but told CNBC "everything was on the table" in regards to Hulu’s future in an interview on Thursday.
"I’ve talked about general entertainment being undifferentiated. I'm not going to speculate if we're a buyer or a seller of it," Iger said. "But I'm concerned about undifferentiated general entertainment. We're going to look at it very objectively."
Hulu boasts around 48 million subscribers and hosts top-rated shows including "Only Murders in the Building," "The Handmaids Tale," and "The Dropout." Hulu's subscribers grew by 2% in Disney's latest quarter.
At the time of the original arrangement between Comcast and Disney, Iger maintained the purchase would allow Disney the opportunity to offer an alternative, more mature viewing experience to consumers, in addition to providing more flexibility with bundling.
Flash forward to today and streaming economics are vastly different as investors focus on profitability amid increased competition.
Disney's direct-to-consumer division reported a $1.1 billion loss in its fiscal first quarter — an improvement compared to the $1.5 billion loss seen in Q4, but still a significant drag on profits.
Disney said last week it plans to lay off 7,000 workers in an effort to slash $5.5 billion in costs. As a result, the media giant plans to restructure the organization into three core business segments: Disney Entertainment, ESPN, and Disney Parks, Experiences and Products.
Iger has emphasized shrinking the company's debt load is paramount to the business: "I am committed to positioning this company for a new era of growth," Iger said in a press release on Thursday.
"Our strategic restructuring will return creativity to the center of the company, increase accountability, improve results, and ensure the quality of our content and experiences."
Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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