Citi Thinks Disney Could Trade Hulu for Hulk

Analyst sees possible sale of 67% Hulu stake to Comcast including rights for Marvel characters Hulk and Namor

Marvel Studios

A Wall Street analyst floated the possibility Thursday that Disney may aim to secure the rights to two Marvel characters held by Comcast — Hulk and Namor — as part of a sale of its 67% stake in Hulu.

Citi analyst Jason Bazinet, who has a “Buy” on Disney shares, said in a note to clients that the entertainment giant’s most recent results left him thinking that it will look to shed Hulu.

“Following fiscal 1Q23 results, we believe the company is less interested in a mass market DTC offering. This raises the possibility that Disney may sell its Hulu stake,” the analyst wrote.

Disney has owned the lion’s share of Hulu, the hybrid subscription/ad-supported streamer, since it completed its $71.3 billion acquisition of 21st Century Fox in 2019.

Under a 2019 agreement, Disney can buy out Comcast’s remaining 33% stake in Hulu as early as January 2024 — and Comcast can require that Disney buy it out.

But with Comcast’s NBCUniversal controlling the two superheroes’ distribution rights, Bazinet suggested a deal could be in the offing.

“While Disney owns all Marvel IP, Universal has distribution rights to Hulk and Namor,” the analyst wrote. “As such, if Disney makes a Hulk or Namor film, Comcast can distribute the film on Peacock. If Hulu is sold, Disney may use this as an opportunity to secure these distribution rights.”

Hulu is a valuable asset with a wide reach. Market research and consulting firm Parks Associates found that 44% of U.S. internet households subscribed to Hulu in the third quarter 2022, a six-point increase over 2021. 

In the last three months of the year, Hulu’s average revenue per user or paid subscriber (ARPU) came in at $12.46, behind only Netflix’s $16.23 and well ahead of Disney+ at $5.95.

Citi has in the past also suggested that Disney could combine Disney+ and Hulu into a single app.

The analyst had a wide estimate for Hulu’s price tag, between $19.8 billion and $27.5 billion.

Depending on the sale price and how Disney uses the proceeds, Bazinet saw a “wide range of outcomes” for Disney stock on such a deal, with the potential to shave up to $3 from the stock or add as much $13.

Disney shares slipped 88 cents in Thursday morning trading to $97.66

Bazinet sees the potential move as a positive for Comcast, and said it could push shares up by $2 or $3. The stock gave up 12 cents early Thursday in a flat market.