Analyst urges sale of Comcast Hulu stake that could be worth $15B (NYSE:DIS)

Analyst urges sale of Comcast Hulu stake that could be worth $15B

Jan. 30, 2021 6:31 PM ETThe Walt Disney Company (DIS)DIS, CMCSA, T, FOXA, FOXBy: Jason Aycock, SA News Editor79 Comments

• After buying out joint venture partners Fox (FOX, FOXA) and WarnerMedia (NYSE:T), Disney (NYSE:DIS) took operational control of Hulu – able to direct the streaming service as a general-entertainment counterpart to its branded Disney Plus service, for its benefit.
• But don’t forget that Comcast (NASDAQ:CMCSA) is a minority partner, with 33% of the company – and one analyst says it’s time to put it up for sale.
• Comcast agreed in May 2019 to sell its stake in five years, which would take it to spring 2024. As the key part of the deal, Comcast could sell its remaining stake in Hulu at a total-company valuation of $27.5B or whatever Hulu is appraised at in 2024.
• But why wait, asks LightShed analyst Richard Greenfield? “The Hulu joint venture appears to have outlived its usefulness, with Comcast and Disney both increasingly focused on their own direct-to-consumer platforms.”
• While Disney is limiting value growth of Hulu through international expansion, Greenfield says, excitement around connected TV is exploding – and Hulu could be worth $45B today.
• And that means Comcast’s share could be worth $15B today – and even more if they wait.
• “Waiting until 2024 to resolve ownership would appear to create an unwanted/unnecessary financial overhang on Disney given how fast the valuation of streaming assets are growing,” he writes. And the joint venture arrangement looks like it complicates the streaming plans at both companies, he adds: “slowing Disney’s ability to unify its streaming services and preventing Comcast from having exclusive access to its current programming and library content” (see Modern Family headed to both Hulu and Peacock).Source: Hulu