Walt Disney taking full ownership of streaming platform Hulu could unlock a new level of growth for the entertainment giant, according to CEO Bob Iger. He has a compelling case. In an interview Tuesday on CNBC, Iger said Disney buying all of Hulu is “the first big step in the direction of turning this into a real growth business for the company.” Shares of Disney advanced roughly 3.5%, reaching a 52-week high of $120 apiece. The stock is up nearly 7% year to date when including Tuesday’s gains. Disney is now set to finalize its acquisition of NBCUniversal’s 33% stake in Hulu by July 24, the company said in a securities filing late Monday, after it agreed to pay an additional $438.7 million on top of the $8.6 billion paid in 2023. The agreement resolves a prolonged dispute over Hulu’s valuation that required a third-party appraiser to get involved. Disney said it would have cost an additional $5 billion if Hulu had been valued at the level determined by NBCUniveral’s appraiser. The announcement itself isn’t a surprise since Disney investors have been following the Hulu saga closely for years, hoping for a resolution. If anything, the surprise is the amount that Disney needs to pay to get it done. CNBC is owned by NBCUniversal, which is a subsidiary of Comcast . The deal grants Disney full ownership of Hulu, ending a complex joint venture that began in 2007 with NBCUniversal and Fox and later included Disney and Time Warner. The deal comes ahead of Disney’s launch of a new streaming service for ESPN’s cable channels this fall that can be accessed through a bundle with Disney+ and Hulu, or as a standalone subscription. With complete control of Hulu, Iger said Disney will have better bundling capabilities — a key element to the company’s overall streaming strategy. Users can already access Hulu content on the Disney+ app. The goal, though, is “putting these apps together fully, making basically not only a seamless experience for the consumer, but … essentially a one-app purchase,” Iger explained Tuesday. Doing so will also “save some money in terms of the operation,” he added. For the company and its shareholders, the financial benefits of bundling can be lucrative. Iger explained the dynamic well during an earnings call a few years ago. He said that bundling ultimately results in “increased engagement, greater advertiser opportunities, lower churn and reduced customer acquisition costs, thereby increasing our overall margins.” The idea: A more comprehensive and engaging content library means consumers are less likely to cancel their subscriptions — that’s what Iger means by lower churn. By having Disney+, Hulu, and ESPN all integrated into a single experience, it encourages more frequent usage and should ultimately drive higher average revenue per user for Disney’s streaming business. Hulu is a valuable asset to Disney for its extensive library of entertainment content, which complements the family-oriented franchise content that Disney+ offers. The streaming platform is housed in Disney’s broader Entertainment business unit, which oversees Disney’s streaming platforms, including Disney+ and ESPN+. Since the company has been bringing in more Hulu and sports content into Disney+, it has benefited the content strategy within Disney+. Disney’s streaming business achieved profitability in the second quarter of fiscal 2024, which further improved in the first quarter of fiscal 2025. Hulu’s full integration strengthens Disney’s direct-to-consumer business, a key growth driver for the company, which could lead to upside for long-term revenue and profits. We like Disney for other reasons too, including its strong theme parks business, which Jim Cramer says is a resilient category even in an uncertain economy. That’s because consumers may be less likely to cut back on beloved Disney vacations, especially since Disney has been mindful of keeping lower-tiered tickets affordable. The company recently opened its seventh theme park location in Abu Dhabi, which speaks directly to the strength of its Parks segment. We maintain our 1 rating on the stock and price target of $130 per share. (Jim Cramer’s Charitable Trust is long DIS. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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