Less than two hours after The Walt Disney Co. CEO Bob Chapek said he’d like to exercise his right to buy out Comcast’s 33% stake in SVOD pioneer Hulu sooner rather than later, Comcast chief Brian Roberts said he’d buy the streamer outright if it were available.
Comcast’s NBCUniversal was one of the original investors in Hulu, and retained a 33% interest in the company after Disney upped its stake to 67% with its buyout of 21st Century Fox assets in 2019. According to their agreement, Disney has the right to purchase Comcast’s interest beginning in 2024, and Comcast has the right to "put" its stake to Disney on the same date.
“Hulu is a phenomenal business,” Roberts said at the Goldman Sachs Communacopia + Technology conference on Wednesday. “It has 50 million customers, its scale is fantastic and it has wonderful content. I believe if it were put up for sale, Comcast would be interested and so would a lot of other tech and media companies. You would have a robust auction. There has never been a pure-play, fabulously scaled streaming service put on the market. I don’t know that the public markets are the way to judge the value.”
Asked if he was just making a point or if he were actually interested in buying Hulu, Roberts was a bit vague.
“That question is up to Disney,” Roberts said. “Either way, the value of 100% of Hulu is what we’re entitled to. But if it were for sale we certainly, and I think others, would also want to get into that opportunity. I think our position is very enviable.”
Roberts' comments seem a bit of a departure from his past stance on the stake, and came less than two hours after Chapek, who spoke at the same conference at 6 p.m. ET, said that he would “love to” buy out Comcast’s stake before 2024 if the cable company agreed on a reasonable price.
Roberts also chafed at Chapek’s comments in an interview with The Financial Times earlier this week, saying he took “great exception” to the Disney chief's allusion in the article that Hulu’s value has declined as sentiment around streaming companies has waned.
So perhaps Roberts’ comments were merely his way of informing Disney that Comcast expects to get paid very handsomely for its stake.
In 2019, Comcast agreed to sell its stake to Disney in 2024, in a deal that set the floor for Hulu’s value at $27.5 billion. Comcast also agreed to sell content from its NBC and Universal Studios arms to the service through 2024. In return, Disney received full operational control of the streamer.
That deal was struck before either company launched its own streaming service — Disney Plus debuted in November 2019 and Comcast‘s Peacock was unveiled in April 2020 — and the valuations for the service are likely higher. About a year ago, MoffettNathanson estimated that Hulu could be worth as much as $47 billion, but cautioned that streaming valuations were volatile.
At a $27.5 billion valuation, Comcast's 33% interest would be worth about $9 billion. At $47 billion, that stake's value rises to $15 billion.
Disney has said it would like to fold Hulu into its Disney Plus service, but that would require full ownership. While Chapek told the FT that Disney and Comcast have spoken “numerous” times over the past year about a possible deal, it appears they may have to wait a little longer to iron out an agreement. Whether that’s in two weeks or two years, the ball seems to be in Disney’s court. ■
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Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.