Ever since Disney and Comcast announced their plans for Hulu following the Walt Disney Company purchasing 20th Century Fox, there has been a chance that Comcast would decide to remove its content from Hulu in 2022, to boost its own streaming service, Peacock.
According to WSJ, Comcast is considering removing much of its content from Hulu and making it exclusive to its Peacock platform, according to people familiar with the matter.
As part of the deal that was made between Comcast and Disney, there is a one-time window to exit from Hulu in early 2022. If it doesn’t exercise this option then, the content will remain there until at least 2024. This is in return for reducing the license fee payable by Hulu.
In 2024, the contract between the two also allows either party to force the other to see Disney purchase Comcast’s share in Hulu. Independent experts will assess Hulu’s fair market value, but Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5 billion. Should Comcast pull its content, it would impact on the value of Hulu. The two companies are currently in discussions over Hulu’s valuation. Comcast is insisting that Hulu is worth $70 billion.
Recently, Comcast stated that it wasn’t in a rush to sell its share of Hulu back to Disney, because it sees that Disney is growing Hulu, making it worth more, so they will get a better return when they have to sell in 2024. This is one of the major reasons why Disney has been investing much less in original programming for Hulu and also why Disney decided to cancel any plans to expand Hulu internationally, instead they added general entertainment content from its studios like 20th Century Studios, FX and ABC onto Disney+ around the world. This is why two sides are in arbitration over Hulu’s strategy and valuation.
According to some of the people familiar with the matter, if NBCUniversal decides to pull its content, it will disappear from Hulu by the fall of 2022.
The decision to pull its content would mean shows like “The Voice,” “Chicago PD”, and “Saturday Night Live”, wouldn’t be available on Hulu. However, Hulu does have separate long-term licensing agreements for some NBC shows like “Law & Order: SVU” and “Friday Night Lights”, which wouldn’t be affected by the decision to pull content.
There have also been discussions within NBCUniversal that it could agree to a new content-sharing deal with Hulu, which could lengthen how quickly a new episode arrives on Hulu, going from the next day to two weeks or even longer.
Currently, it’s expected that Disney will force Comcast to sell its 33% stake in Hulu in 2024. Where it’s also being discussed that Hulu and Disney+ could merge into one streaming platform, as it is in many other countries around the world.
Because of all this conflict with Comcast over Hulu and the overall feeling that one single streaming service is a better approach, with Disney CEO Bob Chapek saying the bundle wasn’t ideal. Hulu is often viewed as the unwanted step-child of Disney. Morale at Hulu is low because there is so much uncertainty about the future of the streaming service. Over the years, many of the executives have left Hulu, as it’s slowly been incorporated into Disney’s media arm. Just last month, Hulu President Kelly Campbell left to become president of Peacock.
Either way, Comcast has to either focus its attention on Peacock to boost subscribers or keep in this limbo state, in the hope that the valuation of Hulu continues to grow. Ultimately, Comcast only has just over two years left in this position, before Disney could make the decision for them. In an ideal world, Comcast and Disney can agree to end their partnership early, as neither party are really benefiting from it right now.
What do you think? Should Comcast pull its content in 2022 or wait until 2024?