Here’s What Comcast Could Reap from Hulu Stake Sale


May. 28 2019, Published 3:17 p.m. ET

Comcast and Disney reach an agreement about Hulu

Comcast (CMCSA) and Walt Disney (DIS) this month reached a broad agreement regarding their stakes in online video service Hulu. Under the agreement, Comcast relinquished operational control of Hulu to Disney. In addition, the companies struck a deal that means Comcast would sell its stake in Hulu to Disney at what looks like a premium valuation. When it comes to a stake sale, Comcast can require Disney to purchase its stake in Hulu as early as January 2024 at a valuation of not less than $27.5 billion. Hulu was valued at $15 billion last month when AT&T (T) sold its 9.5% stake in the business.

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Comcast to get $5.8 billion from Hulu stake

Comcast currently owns a 33% stake in Hulu, meaning the company would walk away with about $9.1 billion if it sells that stake at the minimum valuation that Hulu and Disney agreed to. However, there is a possibility that Comcast’s stake in Hulu could drop to 21% by the time it sells the stake. But that is the lowest Comcast’s stake in Hulu can drop according to its agreement with Disney. Therefore, Comcast is guaranteed to reap at least $5.8 billion from the sale of its Hulu stake when it decides to do so.

Disney more than doubled its stake in Hulu to more than 60% after it purchased the 30% stake that Fox (FOXA) owned in the business.

Hulu boasts nearly 27 million subscribers

Hulu is one of America’s top online video services. It has 26.8 million paying subscribers, making it larger than AT&T’s DirecTV Now with 1.5 million subscribers and Dish Network’s (DISH) Sling TV with 2.4 million subscribers at the end of the first quarter. Netflix (NFLX) had a much larger subscriber base of 60.2 million in the United States alone at the end of the first quarter.

Comcast made a profit of $3.6 billion in the first quarter.


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