Comcast and Disney last week signed a modification to their agreement to bring forward the timing of their sale talks for Comcast’s stake in Hulu to Sept. 30, Comcast CEO Brian Roberts said.
Currently, Comcast owns one-third of Hulu and had set a pact with Disney (which owns the other two-thirds) to begin talks to sell its stake to the Mouse House in January 2024.
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Speaking at the Goldman Sachs Communacopia + Technology investor conference Wednesday, Roberts said all the synergies around Hulu could be worth $30 billion, before you even ascribe value to Hulu itself. The previous minimum $27.5 billion valuation for Hulu was a “hypothetical” set when Disney “had control of the company,” per Roberts, with the company “way more valuable” today than it was when that number was set five years ago.
Roberts said proceeds from Comcast’s sale of its Hulu stake would be returned to shareholders.
“We’ve seen analyst reports that a buyer, depending on who they were, if it was to scale them up, they could have a couple billion dollars, or who knows what, of synergy,” Roberts said. “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. And of course when you go into one of these really robust auctions — and I think if you were selling all of this as-is — there’d be a line of bidders around the block to actually buy all the content, all the bundling of Hulu, that that business we’ve never seen. And so usually buyers in robust auctions pay for it all, and the seller gets all the benefits of the synergy.”
Roberts disclosed that Goldman Sachs has been brought into the appraisal process, and that “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.”
The Comcast CEO did not give a timeline for the sale from there, but said both companies are “well served” to have “clarity for our investors.”
“No one’s ever sold a pure play or auctioned off a pure-play streaming asset that’s in this kind of position; that’s a scarce, kingmaker asset,” Roberts said.
On Friday, Disney disclosed in an SEC filing that “in the event the parties do not come to agreement regarding equity fair value, each party appoints an investment banking firm to determine the value” and if the two values are not within 10% of each other, “then the two investment banking firms select a third firm to make a third determination, in which case the equity fair value shall be the average of the two determinations that are closest in value to each other.”
During his Wednesday session at the conference, Roberts was asked for his thoughts on the Disney-Charter dispute, and the CEO offered that he is “not completely surprised.”
“When you have many distributors of the same product and in a geography, you’re gonna have disputes between the content and distribution,” Roberts said, noting that Comcast sees its own business as not “linear or streaming,” but “linear and streaming.”
“It’s not the first dispute and probably won’t be the last dispute,” Roberts said. “Clearly, we all know the video ecosystem is changing. I think [Comcast] is really well positioned for that change, but change can have disruption and, ultimately, I hope people are looking at, what is the consumer saying? I think the consumer wants simplicity, somebody to help aggregate and have the most bang for their buck. This dispute is putting tension around some of those issues. I hope they work it out. I think that’s in the interest of consumers.”
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