Comcast still owns 33% of Hulu and Lightshed analyst Rich Greenfield thinks that 2021 would be a good year to sell the stake, which could be valued at around $15 billion.
In 2019, Comcast handed over operational control of Hulu to Disney but retained its ownership share. Under the terms of the deal, Comcast as early as 2024 can require Disney to buy its stake and Disney can require Comcast to sell that stake at a fair market value. Disney is guaranteeing a minimum total equity value of Hulu at that time of $27.5 billion.
In a research note, Greenfield said that the Hulu joint venture appears to have “outlived its usefulness” as Disney and Comcast both concentrate on their respective direct-to-consumer services, Disney+ and Peacock. For Comcast, Hulu could be complicating the Peacock plans by preventing the company from having exclusive access to its current and library content. As part of the 2019 deal, Comcast agreed to extend its NBCUniversal distribution agreement with Hulu’s on-demand and live TV services until late 2024.
“Add on the surge in consumer interest in streaming with sub growth exploding and you quickly realize the value of Comcast’s Hulu put to Disney is escalating rapidly – illustrating the need to end the partnership sooner than later for Disney,” Greenfield wrote.
Lightshed used Netflix’s and fuboTV’s valuations per subscriber to assign values for Hulu’s SVOD and live TV subscriber bases while accounting for Hulu’s domestic-only footprint, possible content impacts for Hulu if Comcast sells and the impact of advertising, which is causing a lot of investor excitement around connected TV advertising based on Roku’s current valuation. The firm’s math led it to a $45 billion total valuation for Hulu.
“Waiting until 2024 to resolve ownership would appear to create an unwanted/unnecessary financial overhang on Disney given how fast the valuation of streaming assets are growing,” Greenfield wrote.
Hulu ended the third quarter with 36.6 million subscribers (32.5 million SVOD only and 4.1 million live TV and SVOD), up from 35.6 million in August. Disney had previously hinted at possible international expansion for Hulu but now the company is focused on launching a global entertainment streaming service under its Star brand.