Comcast Has A Hulu Predicament: Keep Or Sell?

It is a decision streaming-forward-thinking companies are now making with increased frequency: Taking high-profile, high-earning content off one network or platform and placing it on its in-house platform/network.

For example, on January 1, Comcast’s NBCUniversal took “The Office” off Netflix and moved it to a new streamer, Peacock.

Comcast is now working on a different, broader model. Not just taking one particular TV series, but shifting content from Hulu and to Peacock, according to The Wall Street Journal.

NBCUniversal owns one-third of Hulu, while Disney has the remaining controlling share. But NBCU needs to make a big decision soon-ish -- to sell off that stake for a purported big gain now or in two years.

With regard to the content on Hulu, under the terms of an agreement with Disney, NBCUniversal has a one-time window to exit from its content-licensing agreement in early 2022.



So Comcast is weighing the potential value of the sale of a multibillion-dollar business against removing a major slice of Hulu content to Peacock.

If it doesn’t pull the trigger, Comcast will need to wait two years -- until 2024 -- to perhaps sell its entire stake in Hulu, the proceeds of which would significantly finance new TV and movie production on Peacock.

Earlier this year, Lightshed analyst Rich Greenfield valued Hulu at $45 billion, placing a $15-billion valuation on the stake Comcast owns. Per an agreement with Disney, there was a guaranteed minimum total equity value of Hulu placed at $27.5 billion in 2019.

Would a decision shifting that content mean a hit on the value of its Hulu stake? Would placing new, much-needed library content on Peacock see sizable gains from subscribers and advertisers?

For the latter, we may see the answer in the TV upfront market this past summer.

Increasingly, pushed by TV sellers -- with TV buying and marketing executives conceding -- there needs to be a major shift in big-brand linear TV media dollars to premium TV streaming services -- around 20% to 25% or so.

That number more or less models closely to what Nielsen has been revealing in The Gauge data, where streaming services now comprise 28% of total TV usage among persons 2+.

The financial equation might now to look at the long term. The betting is that -- either way -- Hulu will probably separate from Comcast in two years. (Disney has the option of requiring Comcast to sell its stake then.)

Comcast needs to control its own future by 2024. But there is no rest in the marketplace. Right now, it needs to roll the dice and hit the gas pedal for Peacock.

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