Comcast considers Hulu divestment

Hulu’s stock has risen on the back of The Handmaid’s Tale

US telco Comcast is prepared to offload a 30% stake in Hulu to gain regulatory approval for its US$65bn bid to buy a slew of 21st Century Fox assets.

Comcast – owner of NBCUniversal, which itself holds a 30% stake in the streamer – released a statement outlining its “superior all-cash proposal” earlier this week, with Fox then confirming the approach.

The offer values shares at US$35 each – a 19% premium on an earlier offer from Disney – and Comcast has said it will match any actions the Mouse House has promised to get its own deal through.

Now US reports from tech site Recode have claimed it would be prepared to divest Fox’s 30% stake in Hulu if regulators required it. Comcast has not commented on the reports.

Hulu was launched a decade ago as a joint venture between Disney, Fox and NBCU, with Turner then taking a 10% stake. Although available only in the US, it has recently enjoyed strong growth following success with shows such as The Handmaid’s Tale.

The US video streamer has also launched a streaming TV service that lets subscribers watch broadcast and cable channels over the internet. Japanese broadcaster Nippon TV acquired Hulu’s operations in the country in 2014.

However, its spending and its investment in live TV have impacted Hulu’s bottom line, with losses of around US$920m in 2017 revealed in recent filings.

Hulu’s stakeholders are believed to have invested around US$1bn in the streamer last year, but even greater losses are expected in 2018 as it attempts to compete with Netflix and Amazon.

Comcast’s formal offer, topping Disney’s US$52.4bn stock deal for Fox’s assets including its film and TV studios, US cable networks and international channels, followed the federal ruling that cleared telecoms giant AT&T to complete its US$85bn takeover of Time Warner on Tuesday.

Comcast confirmed last month it was intending to trump Disney’s offer and was waiting to see the outcome of the AT&T case before it proceeded.

Comcast is also in competition with the Fox-owning Murdoch family for the remaining 61% of European satcaster Sky that Fox doesn’t already own, with the UK government giving the deal the green light last week.