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Disney and Comcast spar over Hulu's value

Aug 18, 2022
Programming costs at <b style='color: #07af54'>Hulu</b> and <b style='color: #4438a3;'>Disney+</b>
Data: Company earnings reports; Chart: Kavya Beheraj/Axios

An ugly fight could break out if Disney goes ahead and buys out Comcast's stake in Hulu early.

Why it matters: Should Disney move ahead with an early pursuit of Hulu, which Disney activist investor Third Point is pushing, such a move would spark a major media deal, strategic move, and content handover worth tens of billions of dollars.

Of note: Disney and Comcast have been haggling over the true value of Hulu since last year.

  • Disney is on the hook to buy out Comcast's 33% stake as early as 2024 in a deal that will at minimum value Hulu at $27.5 billion. Comcast has previously argued it was worth closer to $70 billion, the Wall Street Journal reports.

The intrigue: Comcast even went so far as to accuse Disney of purposely holding back on growing Hulu in order to get a more favorable buyout price, which Disney denies.

  • When Disney first gained majority control via its Fox acquisition, its initial plan was to expand Hulu internationally, before scrapping that in favor of rolling out its Star brand.
  • Disney's rationale was that Star, also gained in the Fox deal, already had more international brand recognition compared to Hulu.

By the numbers: Disney has dramatically increased Disney+'s programming and production costs over the past year, while Hulu has been relatively stable.

  • Through Disney's first nine months of its fiscal 2022, Disney+'s budget has increased by 60%, whereas Hulu's has gone up by 3%.
  • As one of the pioneers of the streaming era, Hulu is a much more mature service compared to Disney+. But there was some hope that Disney would invest more into Hulu than it has so far.

What's next: Hulu is will lose a ton of programming when Comcast will begin to remove large swaths of its shows over to Peacock later this year. That may drive down the programming costs, but that could also make it less valuable.

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