Investor Thinks Disney Should Buy Hulu Now, or Get Out of Streaming, But is He Right?

Activist investors love attempting to publicly shame Disney into doing what they want it to do. In 2022, investor Dan Loeb was not shy in airing his thoughts about how Disney should handle ESPN. Now another investor is chiming in, this time regarding the strategy that he thinks the company should be pursuing in regard to Hulu.

Nelson Peltz is the investor in question, and in his opinion, Disney has been dragging its feet with Hulu long enough. In a recent explosive interview on CNBC, Peltz stated that he thought Disney needed to either purchase the remaining 33% stake in Hulu that it doesn’t currently own, or abandon Disney+ and get out of streaming altogether. Comcast, which pulled the next-day streaming rights to its networks' shows from Hulu in 2022, owns the final third of the service.

The reasoning behind Peltz’s argument is that Disney overpaid when it purchased most of FOX’s assets in 2019, which included the 33% of Hulu that gave the company controlling interest, and is now stuck in a middle ground of high debt. That debt is being augmented by the company’s streaming losses, which climbed so high in 2022 that they contributed to the exit of former Disney CEO Bob Chapek.

Disney did not take Peltz’s comments lightly, and pushed back hard against them. In an SEC filing this week, the company stated flatly that Peltz didn’t really understand the nature of their business, and has “no track record” of helping large media/technology companies in a meaningful way. Peltz is seeking a position on Disney’s board, which is not exceedingly likely if current board members have anything to say about it.

Disney acquired FOX’s stake in Hulu during the 2019 acquisition, leaving only one-third of the streamer owned by Comcast. The company’s CEO Brian Roberts has repeatedly made it clear that he thinks his company’s stake in Hulu would fetch much more than the $27.5 billion that Disney has offered if the stake were put up for auction.

Related: Next-Gen Storytelling Should Stay, Hulu-Disney+ Merger Should Go Under Iger’s Second Tenure

According to Puck News, Comcast is seeking a payday in the range of $50 billion from Disney. That’s a fairly sizeable gap between the two companies, but it’s hardly an insurmountable issue.

With apologies to Peltz, his analysis of the situation at Disney may be off-base. There’s very little reason for Disney to shell out all the extra cash that Comcast wants at this point when it has more than 20 months to get its finances in order first.

Even if Disney decided to walk away from Hulu, there’s very little sense in the company leaving the streaming business altogether. Disney+ has the largest subscriber base of any streaming service in the world besides Netflix, and the company recently launched an ad-supported price tier to help further monetize its customer base.

It would be untrue to say that everything is operating perfectly for Disney, or indeed for any company in the streaming business right now. But Disney+ has become a highly successful product in the three years of its existence, and it offers brand recognition and content loyalty that few other streaming services can match. Just as streaming has changed dramatically in the past five years, it will undoubtedly do so even more in the next five years, and few companies are positioned better to succeed in this next era of streaming than Disney.

Investors are primarily concerned with how to make themselves and their fellow investors more money, so Peltz can perhaps be forgiven for offering Disney advice that would benefit him financially in the short term. But Disney should keep its head down and continue working on the streaming side of its business, including its potential purchase of the final 33% of Hulu.