Hollywood titan The Walt Disney Co., led by CEO Bob Chapek, and cable giant Comcast Corp., led by chairman and CEO Brian Roberts, have struck a new multiyear carriage deal.
Financial terms of the agreement were not disclosed.
The companies said they “have renewed their content carriage agreement and will continue to make Disney’s robust lineup of sports, news, kids, family and general entertainment programming available to Xfinity TV customers.” Additionally, “Comcast will distribute the ACC Network to its Xfinity customers, allowing fans and followers of the Atlantic Coast Conference to access the multiplatform network in the coming weeks,” they said.
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“The multi-year agreement encompasses continued distribution of Disney’s cable channels, including the ESPN networks, the Disney branded channels, Freeform, the FX networks and the National Geographic channels,” the companies added in a statement. “The renewal also includes continued distribution of the SEC Network, now in its eighth season, as well as retransmission consent for the ABC Owned Television Stations in New York (ABC7/WABC-TV), Chicago (ABC7/WLS-TV), Philadelphia (6ABC/WPVI-TV), San Francisco (ABC7/KGO-TV), Houston (ABC13/KTRK-TV), Raleigh-Durham (ABC11/WTVD-TV) and Fresno (ABC30/KFSN-TV).”
Earlier this year, Comcast launched Disney+ and ESPN+ to its Xfinity customers, with those services continuing to be available.
“We are very pleased to have reached this comprehensive agreement with Disney to continue providing Xfinity customers access to their content across our industry-leading platforms,” said Rebecca Heap, senior vp consumer products & propositions, Comcast Cable.
“We’re very happy to extend our longstanding relationship with Comcast and continue to provide their Xfinity customers with Disney’s best-in-class programming,” added Sean Breen, executive vp platform distribution, Disney Media & Entertainment Distribution. “In addition to our news, sports and general entertainment offerings, the launch of the ACC Network in the coming weeks, paired with the renewal of the SEC Network, will give Xfinity’s college sports fans long-awaited access to their favorite games.”
The sector biggies’ previous long-term carriage pact for Disney networks and content was unveiled in early 2012, with analysts at MoffettNathanson saying it expired on Sept. 30.
That arrangement “was signed at a time when NBCU was Comcast’s new toy,” MoffettNathanson analysts Craig Moffett and Michael Nathanson wrote in a report on Sept. 30. “Comcast was eager to show that there was still plenty of life in the cable network model, and awarding Disney a long-term deal on attractive terms was a way not only to get Disney locked in but to also set a favorable comp for NBCU.”
The Wall Street duo also noted that Comcast owns a 33 percent stake in streaming service Hulu, which Disney controls and eventually will fully own. “The current arrangement calls for independent valuation assessment and an unwind in 2024,” the analysts noted, calling it “an asset over which [Comcast bosses] have no control and which could easily be seen as working at odds with their own ambitions for Peacock.” But they also added: “To be clear, there is no indication that Disney and Comcast will use this programming renewal as an opportunity to settle the Hulu stake preemptively.”
Tuesday’s announcement didn’t mention the future of the Hulu stake. The MoffettNathanson team had nonetheless tried to put a value on Hulu in its report. For its subscription VOD portion, “The comparison to Netflix is the obvious starting point,” they noted. “Netflix trades at 6.3 times 2024 estimated revenue. That valuation reflects Netflix’s unique brand equity and, importantly, the scale they had already achieved before the litany of old school media companies decided an international SVOD push was imperative. Netflix warrants a premium to Hulu.”
So the duo used a valuation of five times to estimate the value of Hulu’s SVOD business at around $47 billion. Meanwhile, its live TV product might be worth about $10 billion, they estimated. “Taken together, then, we think Hulu’s aggregate value could well be somewhere in the $57 billion range, or $2.04 per fully diluted Comcast share on an after-tax basis,” Moffett and Nathanson concluded.
