Comcast, Disney’s Public Posturing over Hulu Is More About Valuation than It Is About Excitement
The tug-of-war between Disney and Comcast is continuing to roil the streaming industry as the companies jostle around over control of Hulu’s future. In recent weeks, the CEOs of both rival media conglomerates have laid their claim to the streamer, but ultimately the future of the service is up to Disney, as it has the contractual ability to buy out Comcast’s 33% in Hulu in a little over a year.
In an article on Tuesday from Business Insider, Lucia Moses and Elaine Low outline how the executives’ public posturing has impacted the future of Disney’s potential acquisition and how longtime Hulu employees are dealing with recent transitions.
On Tuesday, the head of Comcast subsidiary NBCUniversal CEO Jeff Shell spoke to CNBC about the sale of Comcast's 33% stake in the streamer, which can contractual happen as early as January 2024.
Before Disney’s 2019 acquisition of FOX, Hulu was split evenly between FOX, ABC (which Disney has owned since 1995), and NBC. The Disney-FOX merger left Comcast with the 33% stake that it currently has and allowed for Disney to purchase the remaining third in five years. The companies agreed that the purchase would be worth no less than $27.5 billion, and that independent market experts would make the final call on the valuation of Comcast’s stake.
Shell reiterated comments made by Comcast CEO Brian Roberts from earlier this summer in which he said that if his company’s stake in the streamer were put up for auction, it would command a healthy price tag. In fact, Roberts added that if the entirety of Hulu was made available, Comcast would be at the front of the line to purchase it, likely to somehow merge it with the company’s current streaming service Peacock. But because of the terms of the agreement between Comcast and Disney, there will likely be no auction; Disney essentially has the right of first refusal to obtain Comcast’s third of the business.
However, in recent months, all media stocks — especially those with streaming businesses — have taken a nose dive as concerns around saturation and inflation have become central to industry discussions. Many onlookers don’t believe that Roberts has any true desire (or contractual opportunity) to purchase Hulu for Comcast, but rather that his public statements are essentially intended to drive up the price for his company's third of the streamer by making the demand seem much higher than it currently is.
While it would behoove Disney to attempt to underplay its excitement to acquire the entirety of Hulu, the company’s execs have said that they would like to complete the process even before 2024, if at all possible.
One of the reasons many insiders think that Disney wants to complete the takeover of Hulu is so that it can be merged with Disney+. Speaking with CNBC in September, Disney CEO Bob Chapek said that if it were up to him he would merge Hulu and Disney+ “tomorrow, if we could,” but also acknowledged that Disney would need to own the entirety of the streamer before any such move could occur.
Chapek Speaks to CNBC About Hulu:
However, this too is likely all about valuation. If Chapek believes that media and streaming stock prices will rebound over the next 14 months, it would make fiscal sense to attempt to capitalize on the current relative financial weakness in the industry. So, both Chapek’s and Roberts’ eagerness to control Hulu are likely just strategic efforts to get their respective companies the best deal possible.
However, there has been one unintended consequence to the constant back-and-forth over Hulu’s future. Dating back to Disney taking over majority control of the streamer in 2019, many current and former Hulu employees, have bemoaned the cultural changes instituted by Disney, according to Business Insider. Hulu once viewed itself as the little guy in the industry trying to take on giants, but now many fear that it will become nothing more than a content tile on the Disney+ menu.
“The benefit of folding into Disney+? Practically, I fully understand,” one former high-level Hulu exec said to Business Insider. “Emotionally, it will feel like a big loss in the end of something that was very different from Disney. It will feel like a loss for probably all the people who worked on it. [But] business is business.”
Whether Disney or Comcast are the ultimate owners of Hulu — and it will almost certainly be Disney — the thinly veiled public attempts to impact the streamer’s value continue to have an impact on both the bottom line and amongst the rank-and-file staffers.
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