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For years, the battle for control of Hulu has been waged between Disney and Comcast. As one of the most popular video streaming services in the US, Hulu boasts a subscriber base of over 48 million, thanks to hit shows like The Bear and Only Murders in the Building.
Owning Hulu has become a crucial asset in the race for streaming supremacy, resulting in massive financial implications for both Disney and Comcast. Disney, which holds a 66% stake in Hulu, aims to acquire the remaining 33% owned by Comcast. This move would be mutually beneficial, combining Hulu’s adult-oriented content with Disney+’s family-friendly shows to create a more robust competitor to Netflix. Additionally, Comcast, struggling to attract viewers to its own streaming service, Peacock, could greatly benefit from the funds.
However, determining a price for the buyout is proving to be challenging. According to the original 2019 agreement, both companies agreed that from January 2024, either party could initiate a sale or purchase of all of Hulu at a minimum valuation of $27.5 billion.
For Disney, this translates to a $9 billion expenditure to buy out Comcast. Given the significant decrease in streaming company valuations over the past two years, Disney’s CEO, Bob Iger, is reluctant to spend more than that. For instance, Netflix shares currently trade at 55% of their peak value in 2021. Furthermore, Disney carries a substantial debt of nearly $45 billion, while its broadcast and cable TV networks struggle with decreasing ad revenue and a shrinking subscriber base.
Conversely, Comcast believes that Hulu’s value exceeds the stated price. Since 2019, subscriber numbers have increased by 61%, leading Comcast to argue that Disney should pay a premium considering the potential cost and revenue benefits of integrating Hulu into Disney+.
So, how much is Hulu really worth? Disney’s streaming services are projected to generate approximately $22 billion in revenue this year, with Hulu accounting for about one-third of that amount. With an average monthly revenue per paid subscriber double that of Disney+, using Netflix’s current sales multiple of 5 times, Hulu’s valuation could reach $33 billion.
Disposing of assets through rumored sales might help Disney secure the necessary funds for the acquisition. An alternative solution could involve an asset swap, such as offering Comcast a minority stake in ESPN. In any case, in the ongoing battle for Hulu, there can only be one victor.
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