Who Could Buy Hulu?
One of the biggest clouds hanging over Disney right now is the future of Hulu, a streaming service that is profitable and has over 40 million subscribers in the United States, but due to its complicated ownership situation with Comcast owning 33% and Disney owning 66%, the streaming industry has changed a lot since the two companies made an agreement to co-own Hulu until 2024, when either company can force Disney to buy Comcast’s stake.
The 2024 deadline is now fast approaching, and we’re seeing the CEO’s of both companies positioning themselves for the sale. Bob Iger has recently said the Hulu situation is tricky and that “everything is on the table”, with regards to selling the platform. The Comcast chiefs have been open about getting a big “cheque” from Disney for Hulu, which is, according to their contract, means Disney would have to pay a minimum of $9 billion for Comcast’s 33% stake.
There’s been lots of speculation that Comcast is trying to position itself to buy out Disney’s stake of Hulu and merge it with Peacock. There’s also been lots of talk of Disney consolidating Disney+ and Hulu into one platform, similar to what Paramount+ and Showtime are doing, and what’s expected to happen with HBO Max and Discovery+. Running more than one streaming platform is expensive, and there are only so many platforms people will subscribe to. Disney+ outside of the US already incorporates general entertainment like “Grey’s Anatomy”, “Family Guy”, and “Only Murders In The Building”, so Disney already knows it works.
As the business world looks to see what Disney is going to do with Hulu, recently, The Wrap, spoke with a number of Wall Street analysts about who could potentially be in the mix to buy Hulu.
LightShed Partners media analyst Brandon Ross thinks that Disney will sell Hulu and focus on Disney+, as it has internationally:
“My belief is that Disney’s preferred route is to find a buyer for Hulu and to focus their streaming effort entirely on Disney+ and take as much general entertainment content as they believe they need into Disney+. It’s superfluous to run side-by-side products and to have to market both, maintain separate infrastructure, et cetera.”
However, Brandon Ross does think that if Comcast is looking to buy out Warner Brothers Discovery, buying Hulu might not fit the plans.
“I don’t think that they want to get ahead of that, try and buy Hulu and then not be able to get a WBD deal through regulatory if that’s their ambition”.
MoffettNathanson thinks that Disney and Comcast could potentially look at it differently, once again partnering together to run Hulu together, to offset some costs.
“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 JV that is unconsolidated from results,” the firm wrote in a Feb. 9 research note. “Disney would still be able to retain control of the content production, especially all the FX Networks programming that feeds into Hulu. Importantly, this would also avoid Disney having to cut a $9 billion check to Comcast and would provide Disney the excess cash to further delever and invest in its other streaming and linear businesses.”
Citigroup analyst Jason Bazinet has previously said that Disney could use the Hulu situation to get back some rights to Marvel properties like Hulk and Namor from Comcast:
“While the cost of securing these rights is likely small relative to the value of Hulu (we estimate the value at only $0.3 billion), it would fit with Mr. Iger’s desire to focus on core brands and franchises.
Gerber Kawasaki managing partner Hatem Dhiab also doubts that Comcast needs Hulu:
Hulu “doesn’t help Comcast with its international expansion aspiration. So unless they get a massive discount from Disney in a fire sale, I don’t see them doing it. They already have their streaming tech and strategy and are executing well through Peacock apps and NBC properties.”
Other companies that might potentially be in line to buy Hulu, could include Amazon, Apple and Microsoft, though many analysts are sure they would want it either. Microsoft is currently trying to get through the acquisition of Activision, so if that went sideways, it’s possible. Streaming media analyst Dan Rayburn has said that they’ve
“made it clear that Microsoft plans to continue to stay focused on it core business and owning Hulu doesn’t help it… sell more gear, more licenses, more cloud services. It’s not a fit for its current business in any way.”
Both Apple, Amazon and Alphabet (Google) all have the money to buy out Hulu, but they also might struggle with antitrust rules. Brian Frons, the former president of ABC Daytime said:
Alphabet and Amazon “both know how to sell advertising. They both would benefit from the content, and production capabilities that one assumes would come with the Hulu brand name. They have the need, the expertise and the cash.”
While trying to find a buyer for Hulu might be difficult, the timing of the sale is also a problem for Disney. Most companies are looking to cut back on their content spending, and no one is going to want to get into a bidding war for Hulu, so Disney might just be stuck having to buy out Comcast’s stake and then moving on from there.
Disney does have some options with Hulu. While merging it with Disney+ is one option, running two platforms as they are isn’t ideal. Another option could be to see Hulu transaction into a FAST service like Pluto TV, which could then be rolled out internationally, as an alternative to Disney+ with much more advertising. There are lots of questions about the future of Hulu, and it’s anyone’s guess as to what might happen next. But either way, the clock is ticking on that 2024 deadline!
What do you think Disney should do with Hulu? Let us know on social media!
Roger Palmer
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