With just over a year left before Disney could buy out Comcast’s financial stake in Hulu, Comcast CEO Brian Roberts dismissed Disney CEO Bob Chapek’s suggestion that Hulu’s value had declined amid public market skepticism about streaming.
“I would strongly object” to this assessment (which Czapek expressed over the weekend in an interview Financial Times), Roberts said during a speech at the Goldman Sachs Communacopia & Tech conference.
“Hulu is a phenomenal business.” Roberts stated. The 15-year-old fully distributed streaming service will generate a “reliable auction” if Disney decides to put it up for sale. In this (unlikely but exciting) scenario, he added, “Comcast would be interested, as would a number of tech and media companies. … I don’t know if you can judge value from public markets.”
In 2019, after completing its $71.3 billion acquisition of most of 21st Century Fox, Disney assumed operational control of Hulu as Comcast retained its financial stake. Under the agreement between the companies, Disney has the option to buy Comcast starting in 2024, but the price remains in question. The value of Comcast’s 33 percent stake has been set at a minimum of $27.5 billion, but the two sides are clearly fighting over leverage as things begin to enter a more critical window.
In 2022, longtime leader Netflix’s market capitalization has shrunk by more than half after it reported two straight quarters of stagnation. The bleak economic picture added to Wall Street’s worries about streaming, given its technology model in which growth is more important than profit, and Roku and a number of media stocks soon began to fall.
Shortly before Roberts spoke, Czapek took the same stage at the conference and outlined his vision for Hulu’s demise and merger with Disney+. He would have made the move now, he said, rather than in 2024, if Comcast were willing to make a “reasonable” offer. This whole situation is a delicate dance for Disney, which has to balance Hulu ads with its buyout efforts at a price that won’t break the bank. At the end of the last quarter, Hulu had 46.2 million subscribers, all of them in the US.
As for resolving the issue before 2024, Roberts said: “Of course, we are always happy to talk about it. But the cost that we structured in the agreement assumes that this solid auction of 100% of the company will operate as a going concern – how much will someone pay for this? — and we’d get our fair share of it. … I think it has tremendous value, and I’m sure our shareholders share this sentiment.”