Following the purchase of Twenty-First Century Fox Inc. (FOXA) entertainment operations, Hulu LLC stands to play a larger role in Walt Disney Co.'s (DIS) direct-to-consumer video strategy.

Disney, Fox and Comcast Corp. (CMCSA) each own 30% while Time Warner Inc. (TWX) has a 10% stake. If Disney can close the purchase of Fox, Hulu would have a controlling shareholder for the first time. The streaming company could become a more aggressive competitor to Netflix Inc. (NFLX) and Amazon.com Inc. (AMZN) . 

"Owning roughly one third of it was great, but having control of it will enable us to greatly accelerate Hulu into that space and become an even more viable competitor to those that are already out there," Disney Chairman and CEO Bob Iger told investors during the Thursday call announcing the deal with Fox.

"We'll be able to do that not only by flowing more content in Hulu's direction, but by essentially having control to the extent that managing Hulu becomes just a little bit more clear, a little bit more efficient, a little bit more effective with the controlling shareholder rather than with equal partners."

"One of the deficiencies at Hulu up until now has been the lack of ability to lead that company and make decisions that are best for Hulu in this environment that we're in and not necessarily best for any individual [owner]," Moody's Investors Service analyst Neil Begley said.

"[The divided ownership] has left this big window for Netflix and Amazon to climb through and get a healthy lead on a global basis," Begley added. "Now you have somebody in charge. That's critical for that platform to thrive."

Not only will Disney have greater control by adding Fox's stake, but it will have a bigger studio and more content to stream on Hulu.

Rather than offer a Netflix-esque giant bundle of content, Iger said that Disney will offer different packages of streaming content will let customers be "choosy" about what they buy.

Hulu to go out on its own?
Hulu to go out on its own?

"Some may want pure family, some may want pure sports, some may want adult, some may want all of it by the way, and certainly we'll make that available," Iger said.

Disney's own films--including those from Marvel, Pixar and LucasFilms-- fit into the "family" category. Fox's National Geographic also falls into the category. Disney plans to launch its own streaming video service in 2019.

ESPN is a natural fit for the sports category. Fox brings over regional sports networks that presumably could be part of the sports streaming package.

Hulu is a home for adult programs and films, such as the Emmy-winning original "Handmaid's Tale." Programming from Fox and FX, which produces shows such as The Americans and American Horror Story, would fit with Hulu's adult focus.  

Disney will continue to operate its traditional cable networks, though Iger said at some point the company may ultimate "flip a switch" and go solely online.

Hulu has launched an online bundle of TV channels online-known as virtual multichannel video programming distributor, or vMVPD-- for $39.99 per month back in May. The package could draw attention from regulators, Barclays Capital analyst Kannan Venkateshwar suggested in a report. 

"While Hulu is small in scale on the vMVPD service having just launched the offering in May, we believe regulators are likely to take a forward looking view of competition," Venkateshwar "We note that at the time of the Comcast/NBCU deal, Hulu was quite small relative to Netflix, but despite that, regulators were quite focused on preventing interference from Comcast."

Scrutiny would intensify if Disney withheld content form its rivals. The company has announced plans to do just that, saying it will no longer provide new movies to Netflix starting in 2019.

Disney's ownership may free up the streaming service. However, regulators may see that Hulu's new freedom has limits.

Editor's note: This article was originally published by The Deal, a sister publication of TheStreet that offers sophisticated insight and analysis on all types of deals, from inception to integration. Click here for a free trial.

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