Disney Vs. Comcast: Is A Battle Brewing Over The Value And Who Should Own Hulu?

A leading streaming platform is owned by two competing media companies. With a deal in place to transfer ownership, leading to a future transaction, things could become heated as a battle now takes place over the value of the platform and what’s next.

What Happened: Streaming platform Hulu is 67% owned by The Walt Disney Company DIS and 33% owned by Comcast Corporation CMCSA, two competing media companies.

Hulu was launched in 2007 as a partnership between several media companies as a platform to air past episodes of television series. While several media companies and private equity investors formerly owned a piece of the company, it was Disney’s buyout of 21st Century Fox in 2019 that gave the company majority control and ownership of the platform.

Comcast has a deal in place to sell its Hulu stake to Disney as early as 2024 based on a fair market value. Under the terms of the deal, Hulu will be valued at a minimum valuation of $27.5 billion, which would make Comcast’s stake worth $9.08 billion.

Battle of Two Companies: Disney CEO Bob Chapek recently said he would like to move up the timing of acquiring the remaining stake in Hulu. Chapek told the Financial Times that Comcast has been hesitant to get a deal done.

While a minimum valuation was part of the original deal, Chapek hinted that due to the market and streaming competition, a lower price could be reached for acquiring the rest of Hulu.

Chapek mentioned that 100% ownership of Hulu could be necessary to fully integrate Hulu into Disney+ and the company’s streaming plans.

“I do believe that we have to have full ownership of Hulu to integrate with Disney+, and we would love to get to the endpoint earlier,” Chapek said.

Comcast CEO Brian Roberts also spoke last week on the Hulu stake and confirmed that the company will go after market value for the Hulu stake, not a renegotiated lower price.

Roberts said Hulu could command a premium with an existing 46 million subscribers and strong brand recognition.

“Hulu’s a phenomenal business,” Roberts said.

The Comcast CEO said there could be multiple bidders for Hulu if the entire company was up for sale, instead of just the minority stake being acquired by Disney.

Roberts also hinted that Comcast would be open to buying Hulu outright, in a move that could allow it to merge Hulu with Peacock.

The relationship between Comcast and Disney when it comes to Hulu is somewhat shaky. Comcast accused Disney of preventing Hulu from growing in a move to impact the market price of the streaming platform. The comments from Comcast came as Disney emphasized its Star streaming platform in international markets over Hulu.

Related Link: Disney CEO Wants To Keep ESPN Despite Calls For A Spin-Off 

Why It’s Important: Hulu is co-owned by Disney and Comcast, who each have their own streaming platforms in Disney+ and Peacock respectively.

Hulu is an important piece of Disney’s strategy going forward, with the company owning Disney+, Hulu and ESPN+ and offering them as pieces or packages for streaming customers.

Disney ended the recent quarter with 221.1 million total streaming subscribers across its platforms, passing the total reported by Netflix Inc NFLX.

Disney reported 46.2 million subscribers for Hulu in the third quarter, up 8% year-over-year. The company had 152.1 million Disney+ subscribers at the end of the third quarter.

Comcast had 13 million paid subscribers for its Peacock streaming platform at the end of the recent quarter, flat from the previous quarter.

As it gears up for the sale of its stake in Hulu, Comcast has been pulling its content from the platform and moving it to Peacock. This includes popular NBC shows like “Saturday Night Live” and “Law & Order” beginning on Sep. 19, 2022. The move also includes content from other Comcast-owned networks like Bravo moving to Peacock.

Acquiring the remaining stake in Hulu was a key priority laid out by activist Dan Loeb in his letter to Disney’s Board of Directors. Loeb preferred a purchase sooner than later.

“We believe that it would even be prudent for Disney to pay a modest premium to accelerate the integration but are cognizant that the seller may have an unreasonable price expectation at this time,” Loeb said.

The comments from Chapek suggest Disney remains content on acquiring the stake in Hulu, with the big question now being the price point.

CMCSA, DIS Price Action: Comcast shares closed Friday at $34.52 versus a 52-week range of $33.43 to $57.96.

Disney shares closed Friday at $108.22 versus a 52-week range of $90.29 to $185.90.

Photo: Courtesy of hulu.com