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Why Disney and Comcast still can’t reach an agreement over Hulu

Why Disney and Comcast still can’t reach an agreement over Hulu


Disney CEO Bob Iger reiterates his hesitancy to buy out Comcast’s 33 percent stake in Hulu.

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The agreement stipulates that Comcast could still force Disney to buy its stake in Hulu, with a final valuation to be determined by independent analysts nearer the deadline.
Illustration by Alex Castro / The Verge

Hulu’s fate still hangs in the balance following statements from Disney CEO Bob Iger this week. Speaking at the Morgan Stanley Tech, Media, and Telecom conference on Thursday, Iger said that Disney is still debating whether it will buy out Comcast’s 33 percent stake in Hulu, alluding to the current economic downturn and the company’s own difficulties with Disney Plus.

“What we’re doing right now, because we own two-thirds of Hulu, and we have an agreement with Comcast that may result in us owning 100 percent, is we’re really studying the business very, very carefully,” Iger said. In an interview with CNBC last month, Iger had similarly refuted assumptions that Disney would buy the remaining stake in Hulu, saying “that that is not necessarily the case,” and that “everything is on the table right now.”

Comcast has a standing agreement to sell its 33 percent share of Hulu to Disney in January 2024

Back in 2019, Comcast and Disney announced an agreement that would eventually give Disney full control of the Hulu streaming service. But that agreement isn’t necessarily a done deal — instead, it simply permits either Disney or Comcast to force a sale of Comcast’s remaining stake in Hulu to Disney starting from January 2024. Hulu’s actual valuation will be independently assessed closer to the sale deadline, but the agreement gives a guaranteed minimum valuation of $27.5 billion — making Comcast’s share worth at least $9 billion. (Disclosure: Comcast’s NBCU division is a minority investor in Vox Media, The Verge’s parent company.)

Even for Disney, that’s a lot of money. And just like many other giant tech and media companies, Disney is a little strapped for cash right now. Iger has announced several cost-cutting measures at Disney since returning as CEO last November, laying off 7,000 workers and restructuring key areas of the business. Disney’s streaming business also lost around $1.5 billion last quarter, with both Disney Plus and Hulu reporting a slowdown in subscribers.

In the face of economic downturn, Disney is hesitant to commit to the purchase

While he expressed that Hulu is a “solid platform” and “very attractive” for advertisers, Iger’s caution isn’t unfounded. “It’s already proven to be valuable for them, and advertising is proven to be valuable for us,” said Iger. “But the environment is very, very tricky right now, and before we make any big decisions about our level of investment, our commitment to that business, we want to understand where it could go.”

Comcast president Mike Cavanagh responded to the hesitancy Iger expressed in February at the same Morgan Stanley media conference, claiming the company is open to other offers for its Hulu stake, albeit at the risk of dissolving its current deal with Disney. “Remember they and we, back in 2019, put together a very clean and good agreement for a put-call that does happen in early 2024,” said Cavanagh, reported by Deadline. “We are very happy with that. But, if there is something different that comes along, we have to consider things.”

As it stands, Comcast can still force Disney to buy its 33 percent stake in Hulu next year per the terms of the put-call agreement. Disney can similarly force Comcast to sell, but given Iger says he’s “targeting $5.5 billion of cost savings across the company,” it’s unlikely that he’ll find enough cash stuffed behind the couches at Disney World in the coming months to pursue such a move.