Why Didn't Comcast Pull the Trigger on Selling Its Stake in Hulu?

Hulu + Live TV
(Image credit: Hulu)

Am I the only streaming-industry observer surprised by this week’s ho-hum announcement of a new carriage agreement between Comcast and Disney? 

David Bloom

(Image credit: David Bloom)

Disney and Comcast executives pronounced themselves “very happy” and “very pleased,” respectively, with the deal over Comcast retransmission and carriage of Disney broadcast, pay-TV channels and streaming services. It resolves negotiations that have dragged since a 2012 deal expired Sept. 30. 

Also: Comcast, Disney Carriage Talks Could Revolve Around Hulu’s Future: Analyst

Well, I’m very happy and very pleased, too. 

And now Comcast subscribers will get access to ESPN’s ACC Network, perhaps a great thing except most cable subscribers have tired of paying for regional sports networks. Perhaps the underperforming football teams at Clemson, Florida State and Miami will bounce back and make the service a must-have. 

Despite the happiness all around, however, the long delay in resolution and the final announcement’s routine nature are surprising because of what they don’t include: resolution of the future of Hulu. 

Some observers had suggested the seemingly routine carriage negotiations might make a well-timed and convenient container in which to resolve Hulu ownership and programming, especially given that the two companies’s executives reportedly do not get along after 15 years of competing over various mega deals.

Certainly speculation ramped up as negotiations dragged. Were they coming up a Grand Unified Theory Of Hulu? What were they doing if not that?

But it was not to be, at least not yet anyway. 

For now, Comcast still owns 30% of Hulu, and its NBCUniversal programming provides a critical bulwark of pretty good and recent programming for Hulu’s otherwise thin lineup of originals. 

But that hasn’t stopped the ticking clock that’s bearing down on 2024, when a 2019 agreement between Comcast and Disney allows either to force a sale of Hulu for a price of at least $9.2 billion. And that 2019 deal allows Comcast to pull its exclusive programming from Hulu as soon as next year. 

Also: Comcast Has Stopped Funding Hulu

During its Q3 earnings call in October, Comcast officials hinted the company might hold on to its Hulu share for a while. 

Comcast CFO Mike Cavanagh described Hulu as a “great business,” active in one of the “hottest areas” for media, subscription streaming.

“We’re happy to be along for that ride,” Cavanagh said during the call with analysts. “I’m glad we didn’t exit at the time three or so years ago. I like the deal we have…It’ll be fine if we stay until the end because I expect the value to keep increasing.”

That could be a negotiating position: buy us out now, or it’ll cost you even more in two years

Also: Hulu Just Quietly Had Its Slowest Subscriber Growth Quarter in 2 Years (Our Deep Dive Into a Chart-laden Garden of Analytical Delights)

Hulu might, in fact, already be worth substantially more than the deal’s minimum price, given the hot market and plenty of available capital, though determining the “real” worth will likely make for sticky negotiations. 

Also: Hulu Needs a New President, But Who Wants the Job?

In the meantime, Hulu has remained in limbo, especially internationally, where Disney has launched Star as an alternative general-interest service, and done nothing to build Hulu beyond the U.S. border. 

Over the weekend, Disney did offer a 99-cent/month sale for a year’s subscription to basic Hulu. It also bolstered the Hulu + Live TV skinny bundle with both a higher price and free Disney Plus and ESPN Plus. 

Hulu has had some good programming news too, like the big audience embrace (according to third-party metrics) of its highly entertaining and “occasionally true” historical dramedy The Great. 

But Hulu is also losing one of its quirkiest and most critically adored comedies, Pen15, whose creators announced in a New Yorker profile that they were ending the show a season early, with the shows debuting now. 

More generally, if you’re not a huge fan of network TV — and admittedly, there are still tens of millions of them —there’s not a lot keeping you around. But a four-day discount and a higher price for an associated offering hardly constitute care and feeding.  

Comcast has growing reasons to push that sale date up: Its own subscription streaming service, Peacock, remains only modestly compelling, though at least it’s picking up the tempo of its original programming debuts.

Getting a deal also would free up a bunch of sunk resources that have been beyond Comcast control since it lost out to Disney in the Fox acquisition. 

Pocketing some extra scratch would be well timed if Comcast executives conclude that its streamer needs to substantially boost program offerings if it wants to keep up with Apple, Amazon, and Netflix. 

Even Disney just said it would increase streaming spending by $8 billion, to $33 billion. About two weeks ago, future CEO David Zaslav said Warner Bros. Discovery will spend $20 billion on programming once their merger is finished next spring. 

It’s even in Disney’s interests, or part of the company’s interest, to resolve control of Hulu. 

That will allow it move ahead with whatever strategy it finally settles on for Hulu’s future (renaming it to Star, perhaps, and consolidating international content in a Netflix-style integration? Merging ESPN Plus and Disney Plus fully into a Hulu/Star bundle?).

So a resolution of the standoff could be a smart move sooner than later. But settling this deal may require far more diplomacy than a couple of months of overtime negotiations on a cable-retrans deal. ■

David Bloom

David Bloom of Words & Deeds Media is a Santa Monica, Calif.-based writer, podcaster, and consultant focused on the transformative collision of technology, media and entertainment. Bloom is a senior contributor to numerous publications, and producer/host of the Bloom in Tech podcast. He has taught digital media at USC School of Cinematic Arts, and guest lectures regularly at numerous other universities. Bloom formerly worked for Variety, Deadline, Red Herring, and the Los Angeles Daily News, among other publications; was VP of corporate communications at MGM; and was associate dean and chief communications officer at the USC Marshall School of Business. Bloom graduated with honors from the University of Missouri School of Journalism.