With a bit more than a year left before Disney can buy out Comcast’s financial stake in Hulu, Comcast CEO Brian Roberts pushed back on Disney CEO Bob Chapek’s suggestion that Hulu’s value has declined amid public market skepticism about streaming.
“I would take great exception to” that assessment (which Chapek expressed in an interview last weekend with the Financial Times), Roberts said during an appearance at the Goldman Sachs Communacopia & Tech Conference.
“Hulu’s a phenomenal business,.” Roberts asserted. A 15-year-old, fully distributed streaming service would generate a “robust auction” were Disney to decide to put it up for sale. In that (unlikely but fascinating) scenario, he added, “Comcast would be interested, and so would a number of tech and media companies. … I don’t know that the public markets are the way to judge the value.”
In 2019, as it completed the $71.3 billion acquisition of most of 21st Century Fox, Disney took operational control of Hulu as Comcast retained its financial stake. Under an agreement between the companies, Disney has the option of buying out Comcast starting in 2024, but the price is a question. The value of Comcast’s 33% position has been set at a minimum of $27.5 billion, but both sides are clearly jockeying for leverage as the situation starts to enter a more critical window.
In 2022, longtime high-flier Netflix has seen its market capitalization shaved by more than half after it reported two straight quarters of stagnation. A darkening economic picture exacerbated Wall Street anxiety about streaming given its tech-style model of prioritizing growth before profits, and soon Roku and a number of media stocks started to plunge.
Just before Roberts spoke, Chapek took the same stage at the conference and outlined a vision for locking up Hulu and combining it with Disney+. He would make that move now and not in 2024, he said, if Comcast were willing to make a “reasonable” offer. The whole situation is a delicate dance for Disney, which has to balance its boosterism of Hulu with its efforts to execute a buyout at a cost that won’t break the bank. Hulu had 46.2 million subscribers as of the end of the most recent quarter, all of them in the U.S..
As far as a resolution to the matter before 2024, Roberts said, “Of course, we’re always happy to talk about it. But the value that we structured in the agreement anticipates that robust auction for 100% of the company as a going concern — what would somebody pay for that? — and we’d get our fair share of that. … I think it’s got tremendous value and I’m sure our shareholders share that belief.”
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