{"id":8330,"date":"2023-09-07T20:08:23","date_gmt":"2023-09-07T20:08:23","guid":{"rendered":"https:\/\/prosfunds.com\/investing\/disney-and-comcast-agree-to-speed-up-hulu-deal\/"},"modified":"2023-09-07T20:08:24","modified_gmt":"2023-09-07T20:08:24","slug":"disney-and-comcast-agree-to-speed-up-hulu-deal","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=8330","title":{"rendered":"Disney and Comcast Agree to Speed Up Hulu Deal"},"content":{"rendered":"
\n
<\/p>\n

<\/p>\n

<\/p>\n
<\/div>\n<\/figure><\/div>\n

\n Comcast
\n and
\n Disney
\n have accelerated the deadline that will determine the future ownership of Hulu, the streaming service now owned two-thirds by Disney and one-third by Comcast.<\/p>\n

Under a five-year old agreement, Comcast (ticker: CMCSA) has the right to put its stake in Hulu back to Disney (DIS)\u2014and Disney has the right to call away the rest of Hulu from Comcast. The original expiration date of that agreement was January 2024, but Comcast CEO Brian Roberts announced Wednesday at the Goldman Sachs Communacopia and Technology Conference in San Francisco that the two parties have now accelerated the target date to start resolving the issue to Sept. 30.<\/p>\n

\n

The original agreement between Comcast and Disney set a valuation floor on Hulu of $27.5 billion, but Roberts has continued to argue that the actual valuation of the business is much higher. <\/p>\n

Speaking at the Goldman conference Wednesday, Roberts said Hulu is a \u201cgreat business,\u201d and the second-largest player in subscription-based streaming services, noting that
\n Netflix
\n has a valuation of about $200 billion.\u00a0<\/p>\n

The formula for valuing Hulu includes not just the service itself, but also the content included on the service, much of it produced by Disney, Roberts said. He said that in a true auction of Hulu, \u201cthere would be bidders lined up around the block.\u201d Roberts notes that the process calls for both sides to hire third-party appraisers, with a third independent appraiser to be added to the mix if the two sides are far apart.<\/p>\n

Using Netflix per-subscriber values as a comparable, as Barron\u2019s<\/em> recently wrote, Hulu would be worth $40 billion, which would mean about $13 billion for Comcast. Hulu, meanwhile, had $10.7 billion in 2022 revenue, a third of Netflix\u2019s. On a comparable revenue basis, Hulu would be worth $65 billion, putting the value of Comcast\u2019s stake above $20 billion.<\/p>\n

Roberts didn\u2019t venture a guess on the actual value of Hulu, but said the business is \u201cway more valuable today\u201d than it was when the two sides set the $27.5 billion floor for Hulu five years ago.<\/p>\n

Proceeds from the sale of the Hulu stake would be used for share repurchases, with Roberts saying Comcast would accelerate its buyback program by several billion dollars in the second half of calendar 2023.<\/p>\n

Wells Fargo analyst Steven Cahall wrote in a research note Wednesday that an accelerated settlement of the Hulu situation could lift a cloud hanging over Disney shares, given other issue like declining linear viewing and subscriber losses in streaming. He adds that Disney\u2019s ultimate streaming strategy is held back as long as Comcast still owns a third of Hulu. \u201cWhile the Hulu put is a downside to Disney, we see the conclusion as removing an overhang,\u201d Cahall writes.<\/p>\n

While Roberts didn\u2019t say when the process might be completed, Cahall writes that investors are likely to conclude that the sale will be finished by year-end.<\/p>\n

Comcast shares are 1.6% higher at $45.25. Disney is down 0.5%, to $80.75.<\/p>\n

Write to Eric J. Savitz at eric.savitz@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Comcast and Disney have accelerated the deadline that will determine the future ownership of Hulu, the streaming service now owned two-thirds by Disney and one-third by Comcast. Under a five-year old agreement, Comcast (ticker: CMCSA) has the right to put its stake in Hulu back to Disney (DIS)\u2014and Disney has the right to call away […]<\/p>\n","protected":false},"author":1,"featured_media":8331,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[32],"tags":[],"class_list":{"0":"post-8330","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\nDisney and Comcast Agree to Speed Up Hulu Deal | Prosfunds<\/title>\n<meta name=\"description\" content=\"Comcast and Disney have accelerated the deadline that will determine the future ownership of Hulu, the streaming service now owned two-thirds by Disney\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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