Disney Pursuing Netflix For Black Viewers With Increased Hulu Stake
Disney wants to up the ante when it comes to Hulu and dominate streaming by increasing it ownership of the company to 70%. WarnerMedia, now owned by AT&T, has a minority 10% stake in Hulu. Variety reported the mouse house is in active talks to acquire that stake in a deal that would net AT&T close to $1 billion. This acquisition would make sense for Disney only if they plan to up their content aimed at Black TV viewers, 74% of whom reportedly stream some of their TV content.
The Breakdown You Need to Know
Disney is betting on Hulu’s future success by investing in more original programming and taking the streaming service into new international markets. With African Americans streaming videos more frequently on all devices than the total U.S. population, CultureBanx reported it will be important for the company to create authentic black content. A report from Horowitz Research found black audiences are also content trendsetters, with 58% reporting they want to be the first to know about new content and are more likely to watch shows that reflects their experiences.
When Disney closes on its $71.3 billion acquisition of Fox, it will gain a majority control of Hulu. They will have a dominant interest of 60%, Comcast and Time Warner will be reduced to minority stakeholders, with 30% and 10% stakes respectively. If Disney is able to increase its ownership to 70%, they’ll need to use this greater control of Hulu to help its 20 million subscribers compete against Netflix and their 125 million subscribers. Not to mention the nearly $1 billion AT&T would receive could help to pay down its debt, that stands at more than $180 billion.
Hulu vs. Netflix
Disney will need to use everything in their arsenal to dethrone streaming leader Netflix, which already has a strong focus on black content. Netflix has been raking up multi-million dollar deals with black content creators including the Obamas, Kenya Barris and Shonda Rhimes, the latter under her Shondaland imprint.
Additionally, they brought on Channing Dungey as a vice president for its original content offerings in hopes of wading deeper into diverse audiences. She is the third high-profile person to be poached from Disney owned ABC, a favorite target for the streaming giant in terms of content creators. The move reunites Dungey with former ABC showrunners Rhimes and Barris. In total, Netflix has about $10 billion in debt but the momentum of customer growth and rising prices has set itself apart from other streaming companies like Hulu.
To better position Hulu against Netflix, Disney is also focused on its upcoming streaming rival called “Disney+” and will launch in late 2019. The new service will carry content from Disney’s top brands like Marvel, Star Wars, and Pixar primarily catered to its domestic family friendly brand. They will add this to the ESPN+ streaming platform, which has 1 million subscribers. Hulu will allow Disney to have more of an international presence with adult audiences.
This article originally appeared in Forbes.