Comcast’s NBC Universal has stopped providing financial backing to general entertainment streamer Hulu as the company works with the Walt Disney Company on a potential acquisition of the cable giant’s minority stake.
The two sides have until early 2024 to find common ground on the valuation of Hulu as part of a broader transaction that would see Disney acquiring full control of the service from Comcast.
Disney and NBC Universal were two of the three media brands who launched Hulu as a joint venture in 2007, years before streaming overtook cable to become the dominant platform for television. Both companies owned an equal 30 percent stake, with 21st Century Fox (now Fox Corporation) holding another 30 percent, and a rotating group of minority investors owning the last 10 percent.
In early 2019, Disney bought Fox’s stake in Hulu as part of a broader asset purchase. The remaining 10 percent not owned by Disney or Comcast was split between the two companies after WarnerMedia exited the venture.
Both sides have been working for years to settle on a long-term plan for Hulu, which will almost certainly end with Disney acquiring Comcast’s 33 percent stake in the venture next year. One area of contention is how much that 33 percent stake is worth — as Hulu becomes more successful, Disney reaps most of the rewards, but the valuation increases accordingly for Comcast’s stake, and that raises the potential acquisition price. (Some estimates put the potential valuation as high as $27.5 billion.)
Disney and Comcast compete in other areas — both have standalone streaming services for some of their own content (Disney Plus and Peacock) — and Hulu has been viewed as something of a stepchild for both companies, who have struggled for years with how to reap the financial benefits of the venture without giving the other side a leg up.
Last year, Comcast drew the first blow when it decided to pull its top-tier NBC content from Hulu and move shows like “The Office” and “Parks & Recreation” to Peacock exclusively. The move helped spur interest in Peacock, but it didn’t necessarily come at a detriment to Hulu; Disney responded by incorporating more television shows from FX and Freeform into the service, and inking separate licensing agreements with competitors like Warner Bros Discovery (WBD) for classic sitcoms and dramas. The end result is that Hulu’s subscriber growth, while stagnant compared to its peers, didn’t move in the other direction.
On Thursday, the Wall Street Journal revealed for the first time that Disney and Comcast have brought their issue before an arbitrator, who may ultimately wind up deciding how much Hulu is worth if both sides can’t settle on a number by early next year. The Journal’s report also said that Comcast had stopped funding Hulu, citing unnamed people who were purportedly familiar with the company’s finances; Disney has stepped in to cover the bills, the Journal said.
Earlier this month, Disney said it will introduce a new streaming option that marries the content libraries of Hulu with its family-friendly Disney Plus by the end of the year. The so-called “super app” will allow streamers to watch shows from ABC, FX, Freeform and Fox alongside classic and current Disney films in one place, without having to switch services.