Comcast and Disney move up the date to decide Hulu's fate

The fate of Hulu's ownership is slated to get resolved sooner than originally anticipated.

Comcast and The Walt Disney Company have agreed to start discussions about Hulu's ownership on September 30, 2023. That modification effectively moves up a process that was originally expected to get underway in January 2024, Comcast Chairman and CEO Brian Roberts announced Wednesday at the Goldman Sachs Communacopia + Technology conference.

According to the put and call agreement struck in 2019, Comcast can force Disney to buy its remaining 33% stake in Hulu, or Disney can force Comcast to sell that stake.

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(Source: Mano Korsanke/Alamy Stock Photo)

"As of September 30, after some short period of time, Disney can call, we can put … and I believe that's what will end up happening," Roberts said.

That process will involve a hypothetical auction of Hulu that could generate well above a guaranteed minimum of total equity value of $27.5 billion for Hulu, which would value Comcast's stake at a minimum of $9.2 billion.

The appraisal process would include a hypothetical auction of Hulu that might include bidders such as Comcast, Disney and others.

Roberts said the process, which would look to drive the maximum value out of Hulu, is "unusual" in that it assumes a situation in which Hulu is sold "as-is" – meaning Hulu's standalone technology platform along with all of the content and bundling elements that comprise the full service. Disney currently offers a discounted bundle of Disney+, ESPN+ and the Hulu subscription video-on-demand (VoD) service, and is developing a unified app that will combine content from Hulu and Disney+.

'Kingmaker asset'

Roberts believes the as-is piece is a critical element that drives up the true value of a large, pure-play streaming service like Hulu.

"That's a scarce, kingmaker asset [to] whoever would get that," he said. "If you were selling all of this as-is, there'd be a line of bidders around the block to actually buy all of that content, all of the bundling of Hulu."

Roberts noted that the minimum $27.5 billion value that's been bandied about is merely a hypothetical value that was picked five years ago.

"The company is way more valuable than it was then," he said, suggesting that the synergy and churn benefits alone that come with Hulu could be worth about $30 billion.

"I think we are excited to get this resolved," Roberts added.

Roberts has said that Comcast would like to buy Hulu if it were ever put up for sale, but he conceded in May that a sale of Comcast's Hulu stake was the most likely outcome.

CBRS tests in Philly

Today's discussion with Roberts at the Goldman Sachs event also touched on the company's growing mobile business and how it fits into a broader convergence strategy at Comcast that will ultimately span services and the network.

About 90% of data used by Comcast's mobile customers runs over the company's Wi-Fi network rather than Verizon's mobile network. But Comcast is now starting to push ahead with more offload opportunities centered on the CBRS spectrum it bid for and won in 2020 that covers about 83% of the company's footprint.

The idea is for Comcast to deploy CBRS spectrum in high-use areas and offload data in a way that further reduces costs tied to its MVNO deal with Verizon.

Comcast has been in no rush to deploy its CBRS spectrum, but it has begun to run tests in its hometown of Philadelphia.

"If this works, we're going to continue to be able to look at more markets," Roberts said.

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— Jeff Baumgartner, Senior Editor,
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