Comcast Stops Funding Hulu: Report

Tensions between Comcast and Disney over Disney’s international streaming strategy have led to Comcast suspending its funding of Hulu, the streaming service co-owned by the companies, according to The Information.

Disney took control of the money-losing site’s operation in 2019, in a deal in which Comcast retained a 33% of Hulu, but is entitled to require that Disney buy out the stake at a fair market value by 2024. Disney guaranteed a minimum total equity value of $27.5 billion for Hulu in 2024.

According to the newsletter’s sources, the companies are now at odds over Disney’s 2020 decision to drop its aggressive international expansion plans for Hulu in favor of growing the Disney+ service by building on India’s Hotstar. Disney picked up Hotstar as well as its stake in Hulu as part of its acquisition of Fox entertainment assets in 2019.

Comstar reportedly argues that Disney has limited Hulu’s international prospects, and is angry that Disney is distributing Hulu content under other streaming brand names in international markets.

In addition to Disney+ Hotstar in India and surrounding regions, Disney has made “Star” a content hub within Disney+ in Canada, the U.K. and some other countries and included some content from Hulu in that hub. In Latin America, Disney plans to launch a “Star+” brand as a standalone streamer this August, and include programming from Hulu and ESPN sports programming. (The Star name is being legally challenged by Starz, which operates its StarzPlay streamer  in Latin America.)

For its part, Disney has argued that its bundling of Hulu along with ESPN in the “Disney+ bundle” since Disney+’s inception has been a major driver of Hulu’s growth from 22.8 million subscribers at year-end 2018 to 41.6 million currently.

Comcast has not confirmed the report that it has stopped paying to support Hulu’s day-to-day operations — a move that would contractually dilute its stake to below a 33% level, according to The Information.

That is reportedly among the issues now being addressed in arbitration between the two companies.

In the 2019 deal, Comcast agreed to extend its NBCUniversal distribution agreement with Hulu’s on-demand and live TV services until late 2024.

In February, Lightshed analyst Rich Greenfield argued that Comcast should sell that stake this year instead of waiting, noting that Hulu could be preventing Peacock from having exclusive access to its content.

At the time, Greenfield valued Comcast’s 33% Hulu stake at roughly $15 million.

At present, the stake is valued at somewhere between $9 billion and $13 billion, according to the newsletter.

1 comment about "Comcast Stops Funding Hulu: Report".
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  1. Ed Papazian from Media Dynamics Inc, June 10, 2021 at 12:52 p.m.

    Interesting, Karlene.This is an example of the real "streaming war" that is emerging---not everybody versus mighty Netflix but the TV folks fighting among themselves. More tifts like this are probably coming.

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