From Breakingviews - ESPN would help Disney and Comcast settle a score
Before long, Comcast clashed again with Disney. Roberts effectively played the spoiler role in then-CEO Bob Iger’s plan to buy Fox’s
Hulu represents their latest showdown. As part of the Fox deal, Disney wound up with two-thirds of the video service, which now counts some 46 million paid subscribers; Comcast owns the rest. The structure makes for an especially awkward alliance. To settle the matter, the two parent companies agreed that in January 2024 Comcast could force Disney to buy its stake or Disney could require Comcast to sell based on a minimum valuation of $27.5 billion.
its lucrative quarter-century stewardship of ESPN; unlike its Mickey Mouse, Marvel, Pixar and Star Wars holdings, it does not produce much valuable intellectual property. And the cost of rights for the National Football League and other sports keeps soaring.networks last year, giving it plenty of appeal. The “SportsCenter” and “30 for 30” producer generates more than $4 billion in EBITDA, per Morgan Stanley estimates.
If Comcast’s stake in Hulu is worth $10 billion and Disney’s 80% of ESPN – assuming partner Hearst were to keep its 20% stake – clocks in at $32 billion, it would leave Comcast on the hook for another $22 billion to make a swap work. Its balance sheet can handle the load. Even after bulking it up, and folding in ESPN’s profit, Comcast’s net debt would remain less than 3 times EBITDA, lower than when it acquired UK satellite operator Sky for around $40 billion four years ago.
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