The Hulu Battle Heats Up

The day we all knew was coming may arrive sooner than we think. Disney has always had the obligation to buy out Comcast’s 33% stake in the streamer. However, that moment could come as early January 2024, as debate over the perceived worth of the surprisingly successful, but US-only, streaming service pits itself against the wider decline in the streaming subscriber market. Blake & Wang entertainment attorney, Brandon Blake, unpacks some of the current talk.

Negotiation Central

We have already seen Disney CEO Bob Chapek suggest they would like to assume full ownership sooner rather than later. However, there’s a phrase that inevitably follows- ‘reasonable terms’. Are they hoping to be able to reinvent the service in their own image while the streaming boom is still in play? Or are they hoping to get a favorable deal on a surprisingly niche service before it reaches its full potential? There is no doubt that, despite its limitations, Hulu has prospered in recent years. To add further intrigue, we’ve seen Comcast fire back with claims of their own willingness to consider buying Disney out.

The Little Streamer that Could

Despite its B-tier placement in the wider streaming world, Hulu has become an interesting business indeed. With strong content and a steadily expanding user base, it has proved a much higher value asset then could have originally been anticipated.

So is this merely ‘smack talk’ before heading to the negotiating table? The press have certainly been interested in this back-and-forth volley. Nor is Comcast wrong- if put to auction currently, there would be more than the two current investors interested in its service. 

Disney first bought into the Hulu machine in 2009, receiving a controlling stake after acquiring Fox Entertainment assets. Nor have Comcast been shy in pricking Disney before- it’s due to their competing bid that Disney had to raise its offer for those Fox assets in the first place. Although they withdrew there, they managed to out-bid Disney for their Sky acquisition later on.

Comcast has also tried to get a controlling stake in Hulu before, but Disney is understandably reluctant to shed the successful streamer. As it stands, Hulu must be valued at at least $27.5B at the time of sale, meaning they would have to shell out north of $9B for Comcast’s stake. We also know that the two shareholders have feuded over the decision to not take Hulu overseas before, instead using their ‘Star’ brand.

Comcast’s existing streaming service, Peacock, has failed to gain the market traction of entities like Disney+ and Netflix. Hulu could have been key to expanding Peacock’s library and subscriber base both. But they may not have the drive to do so. For Disney, Hulu represents a key foothold in more adult markets, making an attractive add-on to ESPN+ and Disney+.

So where to from here? For now, it is still uncertain, but we certainly expect to see the push to answer the Hulu question once and for all to accelerate as time, and the streaming market, develops further.

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