Comcast is prepared to sell its 33% stake in Hulu to Disney, but the question at this point is landing on the right price for that, according Comcast CEO Brian Roberts.
“I think it’s more likely than not” that Comcast will end up selling full control of Hulu to Disney, said Roberts, speaking Tuesday at MoffettNathanson’s Technology, Media and Telecom Conference in New York. “I’m pretty certain if and when we sell our Hulu stake, it will be for more than what we have in it.”
Comcast currently holds a 33% stake in Hulu. Starting in January 2024, Disney can require Comcast to sell its stake in Hulu (and, conversely, Comcast can force the sale). Under the terms of the Disney-Comcast deal for Hulu, the “guaranteed floor value” of Hulu is $27.5 billion, meaning Comcast’s stake is worth a minimum of about $9.2 billion.
Roberts said “I think we have a very valuable position” vis-a-vis ownership in Hulu and said the job now it to arrive at a valuation of Hulu that takes into account multiple factors. “What would a willing buyer in a robust auction [for Hulu] pay?” Roberts asked rhetorically. A streaming service on the scale of Hulu has never gone up for sale, he noted. Part of the appraisal process for valuing Hulu, Roberts said, is accounting for the fact that “you get all the content from Disney and Fox forever, so in theory what’s that worth?”
Regarding a deal for Comcast’s Hulu stake with Disney, Roberts said, “I think ultimately that will be valuable for our shareholders.”
The Comcast CEO’s comments come after Disney chief Bob Iger announced last week that Disney+ and Hulu content will be combined into a single app before the end of 2023 for subscribers of both streaming services. Iger, on Disney’s earnings call last week, said the company has had “constructive” talks with Comcast about the future of Hulu but he declined to predict how the negotiations for Hulu will turn out. “How that ultimately unfolds is, to some extent, in the hands of Comcast and in the hands of… a conversation or a negotiation that we have with them,” he told analysts.
On the May 10 call, Iger said it “has not really been fully determined” what will happen with Hulu. But he said it’s clear that the content on Disney+ combined with “general entertainment content” is a very strong proposition. “So where we are headed is for one experience, with general entertainment content on Disney+,” he said. “If, ultimately, Hulu is that solution… we’re bullish about that.”
For the first three months of 2023, Hulu gained 200,000 net new subscribers in the quarter to reach 48.2 million.
Roberts, at an investor conference in September, had claimed Comcast would be interested in buying out Disney’s majority stake in Hulu “if it was up for sale,” calling Hulu “a phenomenal business.”
As for Comcast’s own direct-to-streaming subscription play — NBCUniversal’s Peacock — Roberts at the MoffettNathanson conference said Peacock is “well positioned” for growth and reiterated that 2023 will mark the peak year of losses for the business (projected to be $3 billion this year). Roberts called out NBCU’s new deal with the NFL that gives Peacock rights the first NFL playoff game available exclusively on streaming. He also noted that in the second half of 2023, Comcast will start charging Xfinity customers for Peacock, after it was previously included for no additional charge.
For $5 per month, Roberts said, “Peacock may be the best-valued product in America,” referring to the ad-supported version of the service. As of the end of the first quarter of 2023, Peacock had 22 million subscribers, up more than 60% year over year.
