Comcast and Disney have agreed to move up the date that seals Hulu’s fate. They have most definitely not agreed on price.
On September 30, Comcast can force Disney to buy out its one-third stake in Hulu; the put/call was previously slated for January 2024. Disney owns two-thirds of Hulu; it acquired Fox’s stake six years ago, along with most of the company’s other assets.
On Wednesday, Comcast chief Brian L. Roberts said he and Disney’s Bob Iger signed off on the amended timeline last week. “It will take a little time for this to play out. But both companies wanted to get it behind us, so we pulled the date forward,” Roberts said at the Goldman Sachs Communacopia + Technology conference.
Steven Cahall, a lead equity analyst at the bank Wells Fargo, agrees. “A consummation of the deal is constructive to both buyer and seller,” he wrote in a note to clients (obtained by IndieWire).
For Comcast, the sale will bring lots and lots of cash to “accelerate” shareholder returns and perform a massive stock buyback. For Disney, full ownership of Hulu will allow the company to move forward with its “ultimate streaming strategies,” Cahall said. “We see the conclusion as removing an overhang.”
Though Roberts did not suggest any specific timing for the deal to close, Cahall said he believes the new date sets it up to be settled by the end of the calendar year.
During his keynote, Roberts also stated that the parties’ previously agreed-upon $27.5 billion minimum valuation for Hulu (which means Disney would owe Comcast more than $9 billion to secure 100 percent of the streaming service) is so 2018.
“The minimum number of $27.5 billion that people have bandied about, that was just a hypothetical that we picked five years ago because Disney had control of the company,” Roberts said. “The company is way more valuable today than it was then.”
It is very true that a lot has changed in streaming, but today the streaming business looks worse. Still, Roberts pressed on, citing recent “analyst reports” that say the synergies alone with Hulu and an existing streaming service are worth “a couple billion dollars — or who knows what… Just that piece of the synergy and the churn benefit could be worth $30 billion. And that’s before you ascribe any value to the actual Hulu.” (Cahall said he sees Disney/Hulu synergies at $1 billion.)
We read a lot of analyst notes and while we’re not calling Roberts a liar, we’ve yet to see one with a $30 billion Hulu valuation without counting the content cross our desks. (We asked a Comcast rep to point us to the one Roberts referred to, but we did not immediately hear back.)
Cahall agrees with a $30 billion valuation for Hulu — but that’s all-in. If left to an open auction, which is still theoretically possible, Hulu could go for more than that; it could also go for less. The Wells Fargo model sets Hulu’s “upper bound” at $37 billion.
Next, Roberts says his appraisers will come to Disney with a valuation; Disney will come to Comcast with its own. Those two figures will be wildly off, and a third-party appraiser will come forward with another number.
Wake us up when September ends.