Disney’s Fox acquisition means the end of Hulu as we know it

Hulu used to answer to three different bosses — Disney, Fox and Comcast — each owning an equal stake in the streaming service. Now it will have one boss: Disney.

The entertainment giant has agreed to buy most of 21st Century Fox for about $60 billion (including debt), which means the owner of the “Star Wars” franchise and ESPN will also own Fox’s TV and movie studio, including “Avatar,” its foreign businesses and, crucially, Fox’s 30 percent stake in Hulu, giving Disney majority ownership.

That also means the end of Hulu as we know it — not that it’s going away. But it will look very different going forward.

That’s because whenever one media player owns/starts/controls its own streaming service, it turns into a walled garden.

Hulu has always been an odd stepchild of a business. As a joint venture between three massive media conglomerates, its leadership hasn’t always been able to determine its own future. But the company has been successful in creating something of a barrier (small as it is) to Netflix and to cord-cutting, and since it readily came with streaming rights to three major broadcasters — ABC, Fox and NBC — it quickly developed an audience.

But now a single company will own more than half of the service, which makes it less likely the other owners, specifically NBC parent Comcast*, will want to continue selling its shows to Hulu. (Time Warner, a silent partner, has a 10 percent stake, which will go to AT&T if it prevails in the lawsuit brought by the Justice Department.)

Disney already announced plans for its own streaming business, which will feature films from Disney and Pixar, content that specifically won’t be available on Netflix. Disney’s Marvel and Lucasfilm franchises will still appear on Netflix as part of a multiyear agreement, but that runs out in a few years. The point: Disney appears set on a world where almost all Disney content streams only on a Disney-owned service.

That brings us back to Hulu, which has more than 12 million subscribers and about 250,000 for its new live TV streaming offering, the online TV package that replicates a small cable bundle.

Disney’s streaming ambitions won’t get under way until 2019, and when it does it will be starting from zero. By that point, Hulu will easily have more than 12 million subscribers, making it an obvious place to piggyback Disney’s new streaming business. Or, more simply, it could convert Hulu into Disney’s streaming service.

There are any number of wrinkles to either scenario. Comcast has remained a silent partner in Hulu as part of a consent decree it accepted when it bought NBCUniversal, but those terms end in September, before Disney can realistically complete its Fox deal.

Comcast may claim Hulu’s 12 million-plus subscribers belong equally to it, since its content and investment dollars helped generate that audience, or at least a third of it. The cable company could ask the Justice Department to review the acquisition and force a sale of Hulu.

That’s not an out-of-the-ballpark scenario, given recent moves by Justice’s newly minted antitrust executive Makan Delrahim, who generally favors a sale of assets in any troublesome merger. (Justice has already filed a lawsuit against AT&T’s proposed purchase of Time Warner, after AT&T refused to sell the Turner division to win approval.)

Rich Greenfield, an analyst with BTIG, outlined a case where Comcast prevents Disney from making any major changes to Hulu to the point of frustration, thereby forcing Disney to sell the streaming service to, yes, Comcast.

But there’s a big risk to owning Hulu outright — it loses lots of money. Hulu lost $560 million in first nine months of this year, 55 percent more than its $360 million loss for the same period last year.

If you’re Comcast, it might just be easier to stop selling its content to Hulu, or simply sell its 30 percent stake to Disney, thus absolving it of any of its losses.

Hulu, of course, will eventually look very different in any of these outcomes. The service, which won an Emmy this year for the harrowing series “The Handmaid’s Tale,” will ultimately have to rely less on broadcast networks for its content and could become a place for more originals, a tack Netflix and Amazon have taken.

There is one other possibility: Disney lets Hulu run its course, and after all its media rights expire it shuts down the service altogether. It would be an end to one of the more forward-thinking experiments ever attempted by a legacy media venture.

But it wouldn’t be surprising, either.

* Comcast’s NBCUniversal is a minority investor in Recode parent company Vox Media.

This article originally appeared on Recode.net.