Telecommunications giant AT&T sold its nearly 10% interest in Hulu for $1.43 billion, returning its stake in the streaming service now controlled by Walt Disney Co.

AT&T said the deal, announced Monday, valued the Santa Monica-based streaming service at $15 billion.

AT&T was expected to sell its interest in Hulu as AT&T’s WarnerMedia starts its own streaming service later this year.

“We thank AT&T for their support and investment over the past two years and look forward to collaboration in the future. WarnerMedia will remain a valued partner to Hulu for years to come as we offer customers the best of TV, live and on demand, all in one place,” Hulu Chief Executive Randy Freer said in a statement.


Disney owns 60% and Comcast owns 30% of Hulu. Disney increased its stake when it purchased much of 21st Century Fox last month.

Hulu continues to grow its subscribers, reaching more than 25 million last year, an increase of 48% across its on-demanding streaming service and live-TV plans in the United States. Its popular shows include “The Handmaid’s Tale,” an adaptation of the Margaret Atwood novel about a dark society where fertile women are forced by a government to give up their jobs and focus on birthing children.

Hulu is expected to have an operating loss of $1.5 billion in the 2019 fiscal year and aims to gain profitability in fiscal year 2023 or 2024, according to a Disney investor presentation.

Disney will probably bundle its Disney+, ESPN+ and Hulu services for a discount, said Kevin Mayer, chairman of Disney’s direct-to-consumer business, at Disney’s investor day last week. The company has plans to take Hulu international, he added.


AT&T acquired Time Warner Inc. last year, an $85-billion deal that included a 9.5% stake in Hulu. AT&T renamed the Time Warner businesses WarnerMedia.

The Dallas phone company said it would use proceeds from this transaction to reduce its debt. AT&T has $170 billion in debt and is under pressure from Wall Street to pare it down.

“AT&T is going to take the money and bet on WarnerMedia’s own service — it takes a significant amount of capital to launch a service of scale, especially when it’s a fight with premium original content,” Eunice Shin, a partner at Prophet, a brand and marketing consultancy, said in an e-mail.

A beta version of WarnerMedia’s streaming service will launch in the fourth quarter, followed by the introduction of original content on the platform in 2020. The service will compete with other streaming rivals including Hulu, Disney+ and Netflix.


“I think you can expect the crown jewels of Warner will ultimately end up on the new service,” Kevin Reilly, chief creative officer of Turner Entertainment and president of TBS and TNT, said at the Television Critics Assn.’s winter media tour in Pasadena earlier this year.

wendy.lee@latimes.com

Twitter: @thewendylee