Comcast, Disney Move Up Start of Hulu Negotiations

Comcast and Disney have agreed to move up the date on which they begin negotiating the fate of their jointly-owned streaming service, Hulu, the cable company’s CEO said Wednesday.

The companies plan to begin work negotiating a potential sale of Comcast’s minority stake in Hulu on Sept. 30, months earlier than their initial January start date. Hulu, home to shows such as “The Handmaid’s Tale” and “The Bear,” is likely worth more than $30 billion, Comcast chief executive Brian Roberts said.

The negotiations between Disney and Comcast come as entertainment companies struggle to make their services profitable and determine what consumers are willing to pay. At the same time, linear TV channels are losing subscribers rapidly, putting more pressure on companies to turn a profit on streaming.

Disney became a majority owner of Hulu when it acquired 21st Century Fox’s major entertainment assets in 2019, a deal that boosted the company’s stake in the streaming service from one-third to two-thirds. It left Comcast with a one-third stake.

Under an agreement reached that same year, both Disney and Comcast have the right to force a sale of Comcast’s stake at fair-market value, with a minimum valuation of $27.5 billion for the whole service.

Last week, Disney and Comcast decided to move up the date on which either company can force a sale of the cable company’s Hulu stake to Sept. 30, Roberts told investors at Goldman Sachs’s Communacopia and Technology investor conference in San Francisco. Doing so will provide investors of both companies better clarity of what it will mean for them, he said.

Roberts expects that Comcast will sell its one-third stake to Disney as a result of the negotiation, but he said he believes Hulu is worth more than the minimum valuation.

The Hulu negotiations between Comcast and Disney are expected to be protracted and complex. Disney and Comcast have already been at odds about its valuation, The Wall Street Journal has reported.

Hulu had 48.3 million subscribers including its live-TV offering as of July 1. The service has the second highest engagement among customers after Netflix, Roberts said, citing ratings firm Nielsen. As such, Hulu would be attractive to a range of bidders, he noted, adding that the appraisal process has to factor in what third-party bidders would offer for Hulu.

“No one has ever sold or auctioned off a pure-play streaming asset that is in this kind of position,” Roberts said. “That’s a scarce, kingmaker asset.”

Hulu’s value to a buyer includes all of the programming in the platform’s library, much of which is owned by Disney, Roberts said.

Hulu has been a key asset for Disney in minimizing customer defections among its streaming services. Disney sells a bundle that includes Hulu, Disney+ and ESPN+ that is cheaper for consumers than buying subscriptions to all three separately.

Roberts said the value that Hulu would deliver to any buyer in the form of customer retention and cost savings would be at least $30 billion.

Disney didn’t immediately respond to requests for comment.

Roberts said Comcast expects to return the proceeds from the Hulu stake sale to shareholders through stock buybacks.

While the companies’ new start date for negotiations is Sept. 30, the actual appraisal process for Hulu is expected to start in late October, Roberts said. It is unclear how long it will take.

In a separate arbitration related to Hulu, Comcast has argued that Disney’s decision to use its Star brand for its general entertainment streaming service overseas, instead of Hulu, as planned, hurt the value of Hulu.

Write to Jessica Toonkel at jessica.toonkel@wsj.com