With all that’s going on at The Walt Disney Co., the question of what happens to Hulu remains.
Disney could buy out Comcast’s 35% stake. Or it could try to sell the streaming service to Comcast. But according to analyst Michael Nathanson of MoffettNathanson, there’s a third option.
Nathanson suggests that both parties could be well served if each owned half of Hulu.
“If Comcast is willing to rework the deal, we think it could be an elegant way for both companies to claim victory and end up with a 50/50 joint venture that is unconsolidated from [either company’s financial] results,” Nathanson said in a research note Thursday.
“Disney would still be able to retain control of the content production, especially all the FX Networks programming that feeds into Hulu,“ Nathanson said. “Importantly, this would avoid Disney having to cut a $9 billion check to Comcast and have the excess cash to further de-lever and invest in its other streaming and linear businesses.”
And while Comcast shareholders might like getting paid $9 billion for their stake in Hulu, having half of the streaming platform could mean turning away from Peacock, which is expected to lose $3 billion this year.
Taking Peacock out of the equation would rationalize the fragmented streaming business, shortening the path to profitability for all of the media companies making the direct-to-consumer pivot.
“To be sure, it might be a blow to the ego to cede ownership of the customer. But one of the clear lessons of the streaming wars thus far is that 'owning the customer' isn’t all that it’s cracked up to be,” Nathanson noted.
Hulu was originally set up by NBC, Fox and Disney to stream network shows. Disney wound up with a controlling interest in the streamer when it acquired 21st Century Fox, with Comcast -- now NBCU’s parent company — owning the rest.
In January 2024, both companies have the right to resolve Hulu’s ownership, either with Comcast making Disney buy them out, or Disney forcing Comcast to sell its stake. The trick is determining a “fair value.”
On CNBC Thursday Iger was he wouldn’t rule out selling Hulu, and was non-committal about buying it.
Last year, Comcast CEO Brian Roberts said he’d like to buy Hulu, if it were for sale.
Nathanson called buying Hulu a terrible idea for Comcast. “Surely even Comcast will see that why that would be a terrible idea. The real value in Hulu is in the content and production behind the consumer brand; stripped of its content supply, it is little more than a shell,“ he said.
“We believe a return to the consortium model, if it meant cutting the losses at Peacock in favor a larger consortium-backed Hulu, might be better for everyone involved,” Nathanson said. ■
