Disney and Comcast Agree To Move Up Hulu Sale Negotiations
One of the biggest questions looming over the future of streaming is when, and for how much, Comcast will sell its one-third stake of Hulu to Disney.
Under a 2019 agreement, Disney currently owns a 66% stake in Hulu, with rival Comcast holding the other third. Per the agreement, however, Disney had the option to buy out Comcast’s share of the streaming service beginning in 2024. At that time, Comcast could also force Disney to buy its stake.
Bob Iger’s Big Decision
When Bob Iger returned to The Walt Disney Company in November 2022, one of the biggest decisions he had to make was what to do with Disney’s Hulu stake.
At the time, Disney was cash-strapped, and future profitability in streaming remained questionable.
Many observers felt that Disney would be best served selling their stake in Hulu. The thought process was that Disney could lessen its debt burden and hedge its bet on streaming.
Disney and Iger, however, were eventually convinced that Hulu was an important component of Disney’s future. When the Disney CEO announced that a new “one-app” experience, that would combine the libraries of Disney+ and Hulu, was coming, the writing was on the wall.
Disney Will Buy Out Comcast’s stake
In July 2023, Iger publically confirmed that Disney would buy out Comcast’s stake in Hulu.
“Part of the work that I’ve been focused on over the last seven months, is understanding all of these businesses. Where they are today, and where they could go,” he said.
Following Iger’s statement, the question shifted from what Disney would do, to when they would do it.
With Disney itching to combine Hulu and Disney+, the company has agreed with Comcast to move the timing of their Hulu sale talks up to September 30.
What is Hulu Worth?
Speaking at a Goldman Sachs investor conference, Comcast CEO Brian Roberts said that all the synergies around Hulu could be worth $30 billion before the value of Hulu itself was even ascribed.
Per Disney and Comcast’s previous agreement, the minimum number the company can be valued for is $27.5 billion. According to Roberts however, the company is “way more valuable” today.
“We’ve seen analyst reports that a buyer, depending on who they were, if it was to scale them up, they could have a couple billion dollars, or who knows what, of synergy,” Roberts said.
“Just that piece of the synergy and the churn benefit could be worth $30 billion. And that’s before you ascribe any value to the actual Hulu. Of course when you go into one of these really robust auctions– and I think if you were selling all of this as is, there’d be a line of bidders around the block to actually buy all the content, all the bundling of Hulu, that that business we’ve never seen. And so usually buyers in robust auctions pay for it all. And the seller gets all the benefits of the synergy.”
Will A Sale Be Finalized Soon?
While the Comcast CEO did not give a timeline of when a sale could be finalized, Roberts did note that both companies would be “well served” to have “clarity for our investors.”
“No one’s ever sold a pure play or auctioned off a pure play streaming asset that’s in this kind of position, that’s a scarce kingmaker asset,” Roberts said.