If Netflix, Inc. (NASDAQ:NFLX) shareholders aren’t asking the question yet, they should be. That is, how might the Walt Disney Co (NYSE:DIS) acquisition of Twenty-First Century Fox Inc (NASDAQ:FOXA) impact Netflix’s business, and by extension, impact the NFLX stock price?

Answer: It’s not going to be good.

There are those who disagree with that idea. They argue that Netflix has a commanding hold of the over-the-top television market that’s not going to be disrupted. And, that’s not an entirely unfair assessment.

However, the melding of the two media giants into one mutually solves a problem the two couldn’t really solve on their own. And it does indeed pose a real threat to the already-fragile price of NFLX stock.

A Growing Threat to Netflix

On the slim chance you’re reading this and haven’t yet heard, Walt Disney is acquiring most of 21st Century Fox, shelling out $52 billion for most of the media giant. Coming under the Disney umbrella would be Fox’s rights to make X-Men movies, not to mention Fox’s entire movie studio group.

There’s some of Fox’s television assets as well. Though broadcast regulations will, theoretically anyway, prevent ESPN parent Disney from also taking control of Fox Sports, and Fox News would conflict with Disney’s ABC News.

The aspect of the deal that should worry current and would-be owners of NFLX stock is the fact that the pairing of Disney and Fox gives the duo a commanding control of arguably Netflix’s biggest threat, streaming television venue Hulu.

Hulu is presently equally owned by cable television giant Comcast Corporation (NASDAQ:CMCSA), Walt Disney and 21st Century Fox, each with a 30% share. Time Warner Inc (NYSE:TWX) owns the other 10%, via its property Turner Broadcasting System. The proposed deal, if permitted to happen, would translate into 60% control of the platform.

And don’t think for a minute Disney CEO Bob Iger isn’t thinking about what Hulu could become with a more centralized direction. He plainly said after the intended merger was announced:

“Owning a third of [Hulu] was great but having control will allow us to greatly accelerate Hulu into that space and become an even greater competitor to those already out there. We’ll be able to do that not only by putting more content in Hulu’s direction but by essentially having control to the extent that managing Hulu becomes a little bit more clear, efficient and effective.”

Iger is perhaps even more keen on direct-to-consumer choices like Netflix than his comment implied. In September, before the Fox deal was even on the radar, Disney was already aiming to develop online-streaming of ESPN and Disney services.

With Fox’s content as well as Comcast-owned NBCUniversal’s content under one roof at a time when Netflix is about to lose access to Disney’s future films, Disney will now have enough quality content under the Hulu umbrella to start turning more consumers’ heads away from Netflix.

There’s also the not-so-small matter that Hulu already has a large following.

The co-op doesn’t divulge subscriber details, though experts figure Hulu’s got about 47 million unique viewers as of last month. That’s less than half of the 109 million Netflix has in tow, though as Iger pointed out, Hulu’s been operating without a rudder. If this acquisition is allowed to proceed, look for Hulu’s draw to improve.

Also bear in mind that Hulu offers a package that gives subscribers access to live network broadcasts. This is an area that Netflix thus far has shunned, despite the obvious benefits of melding local network programming with a huge on-demand library.

Bottom Line for NFLX Stock

It still remains to be seen just what kind of threat a new-and-improved Hulu along with the impending stand-alone Disney streaming service truly pose. Though with stronger competition developing at a point when Netflix is losing core content and going deeper into debt, there’s no denying it’s not in a great position to wage a war against better-funded and better-equipped foes.

To be clear, the advent of a Disney/Fox deal doesn’t inherently doom NFLX stock. And even if trouble is in the cards, it may not materialize right away. Still, the development is one Netflix investors should watch closely, as it’s the biggest test thus far the company will face. We’re about to find out just what Netflix is made of and how loyal its members really are.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.