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How Selling Hulu Could Make Sense for Comcast

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Comcast might sell its stake in Hulu

Media giant Comcast (CMCSA) is in talks to sell its 30% stake in online streaming service Hulu to Walt Disney (DIS). Disney’s acquisition of 21st Century Fox’s assets brought its share in Hulu from 30% to 60%, making it the majority stakeholder. AT&T’s (T) WarnerMedia then sold its 10% stake in Hulu in mid-April for $1.43 billion, making Disney the owner of 70% of Hulu. AT&T had valued Hulu at $15 billion, which means Comcast’s stake could be worth ~$5 billion.

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Hulu’s control

According to CNBC, Comcast is waiting for the right time to unload its 30% stake, as it reportedly believes Hulu’s valuation could increase over time. However, by selling its minority stake in Hulu now, Comcast could use the proceeds to pay off the debt it accrued with its $39 billion acquisition of 61% of Sky in Q4 2018.

Comcast struggling to grow its pay-TV subscriber base

Comcast is struggling to grow its pay-TV subscriber base amid competition from online streaming players such as Amazon Prime (AMZN), Netflix (NFLX), and Alphabet’s (GOOGL) YouTube TV.

Comcast lost 107,000 residential video customers in Q1 2019, compared with 93,000 in the prior-year quarter. Meanwhile, Verizon (VZ) lost 53,000 Fios video customers and AT&T lost 544,000 premium TV subscribers.

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