Disney "Top Competitor's Market Value Plummets... Acquisition Needs Adjustment"
[Asia Economy Reporter Yujin Cho] The two major U.S. media groups, Walt Disney and Comcast, are engaged in intense negotiations over the price and timing of acquiring stakes in the online video service (OTT) Hulu.
As the OTT market, which was booming during the COVID-19 pandemic, rapidly cools down and the value of the industry leader Netflix plummets, the battle over Hulu's acquisition price between the two sides is expected to intensify.
On the 15th (local time), according to U.S. economic media CNBC and others, Bob Chapek, CEO of Walt Disney, attended a telecommunications and media conference hosted by Goldman Sachs and publicly stated, "We hope to purchase Comcast's entire 33% stake in Hulu," adding, "If possible, we want to accelerate the acquisition schedule ahead of plan."
He added, "We will come up with an appropriate solution mutually agreeable to both companies to ensure the deal can be completed early."
With the COVID-19 special demand over and the market significantly cooled due to excessive competition among OTT providers, Walt Disney hopes to lower the acquisition price and quickly finalize the deal.
Previously, Walt Disney signed an acquisition option contract with Comcast to purchase Comcast's entire Hulu stake for more than $27.5 billion by January 2024. After acquiring Hulu, Walt Disney is preparing to launch a new service combining Disney Plus and Hulu.
Brian Roberts, Chairman and CEO of Comcast, is speaking at an event announcing the strategic partnership between Alibaba and Universal Beijing Resort on October 17, 2019. (Photo by Reuters)
In response, Comcast stated that while it is not entirely unwilling to sell its Hulu stake earlier than planned, the pace of sale discussions depends entirely on Walt Disney.
Brian Roberts, Chairman and CEO of Comcast, said, "The Hulu brand, with a subscriber base of 46 million, is worth paying a premium for," adding, "Hulu is an amazing business, and if it goes on the market, it will attract multiple bidders."
This suggests the possibility of terminating the acquisition option contract if price negotiations with Walt Disney do not go well.
These remarks clearly show the differing perspectives between the two companies regarding Hulu's acquisition. Walt Disney insists that Netflix's current value should be reflected in Hulu's final acquisition price.
This is because market demand is declining, growth stagnation is expected due to excessive competition, and the market leader Netflix's market value is rapidly dropping in real time.
Netflix's market capitalization closed at $104.675 billion (approximately 147 trillion KRW) on the day, down 66% from its peak over the past year.
Walt Disney is currently the world's third-largest OTT operator after Netflix and Amazon Prime Video. Since its launch, Walt Disney has increased investments in operating its own studios, securing intellectual property (IP), and mergers and acquisitions (M&A) to strengthen competitiveness.
After acquiring 21st Century Fox for $71.3 billion in 2018, it is expected that acquiring Hulu as well will firmly establish Disney as a rival to Netflix. Foreign media predict that the behind-the-scenes battle over Hulu's stake sale will remain fierce until the very end.
Hulu was established in 2007 as a joint venture by Walt Disney, 21st Century Fox, Comcast, and Warner Bros., who felt threatened by Netflix's rapid growth. Two years after its founding, Walt Disney acquired 21st Century Fox, securing a 60% stake in Hulu. When AT&T, which acquired Warner Bros., sold its 10% stake in Hulu, Walt Disney and Comcast currently hold 67% and 33% stakes in Hulu, respectively.
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