CMCSA - Wall Street Breakfast Podcast: Disney To Acquire Comcast's Hulu Stake

2023-11-02 06:31:58 ET

Summary

• Disney expects to pay Comcast $8.61B by Dec. 1 for its one-third stake in Hulu.
• Six Flags and Cedar Fair Entertainment may finalize a merger deal as soon as this week.
• Live Nation falls as the Justice Department reportedly investigates its agreements with venues and artists.

Listen below or on the go on Apple Podcasts and Spotify

Disney ( DIS ) expects to pay Comcast ( CMCSA ) $8.61B by Dec. 1 for Hulu . (00:27) Cedar Fair (FUN), Six Flags ( SIX ) gain amid reports of potential merger . (01:55) Live Nation ( LYV ) falls amid report DOJ probing deals with artists, venues -report. (02:52)

This is an abridged transcript of the podcast.

Disney (NYSE: DIS ) says it expects to pay about $8.61B to NBCUniversal (NASDAQ: CMCSA ) to acquire its one-third stake in Hulu .

This announcement follows Comcast's widely expected move to take advantage of a Nov. 1 trigger date to exercise its right to engineer the sale of its stake, part of a unique put/call arrangement Comcast and Disney entered into years ago -- when Disney bought out the other major partner Fox and the company then known as Time Warner sold out of its stake.

Disney expects to pay the $8.61B by Dec. 1; it says the sum marks NBCU's part of the $27.5B guaranteed floor value for Hulu to which the companies agreed in 2019, minus anticipated outstanding capital call contributions payable to Disney by NBCU.

However, Disney could pony up somewhat more than that sum. Comcast in recent months has been floating a significantly higher valuation for Hulu, and two weeks ago the two companies hired outside banks to help them arrive at a fair valuation .

Those parties will value Hulu as of Sept. 30, and if they arrive at a valuation greater than $27.5B, Disney will pay NBCU its percentage of the difference.

That appraisal process timing is uncertain, Disney said, "but it should be completed during the 2024 calendar year."

Six Flags (NYSE: SIX ) is said to be nearing a deal to merge with Cedar Fair Entertainment (NYSE: FUN ).

According to a WSJ report on Wednesday, which cited sources familiar, A deal between the two may be finalized as soon as this week.

Reuters also reported on the talks on Wednesday. The report said that if there is an agreement, it could happen as soon as today when Cedar Fair reports its Q3 results before the market opens.

In 2019, Six Flags ( SIX ) bid $70 a share for Cedar Fair, a cash and stock deal that was rejected by Cedar Fair. Last February it was reported that SeaWorld ( SEAS ) offered to buy Cedar Fai r ( FUN ) for $60/share.

Bloomberg reported last February that private equity firm Centerbridge built a more than 5% stake in Cedar Fair ( FUN ) and believed that the amusement park company could get interest from other amusement park chains if it put itself up for sale. As of the end of June, the Centerbridge stake in FUN was 2.6%.

Cedar Fair ( FUN ) and Six Flags ( SIX ) didn't immediately respond to Reuters requests for comment.

Six Flags ( SIX ) has a market cap of $1.75 billion, while Cedar Fair ( FUN ) is now valued at $1.89 billion.

Six Flags ( SIX ) is scheduled to report Q3 results next Thursday.

Live Nation Entertainment (NYSE: LYV ) was down 1.8% in postmarket action amid a report that the Justice Department is looking into if the company's agreements with venues to book talent and serve as a ticketing provider may be anticompetitive .

According to a WSJ report on Wednesday, which cited people familiar with the matter, the agency is reviewing the deals that Live Nation ( LYV ) uses to land artists for its events. The agency is also looking at whether the company's agreements restrict venues' ability to work with other promoters or ticket services.

"We do not understand DOJ to be investigating any idea that it could be anticompetitive for us to pay artists more than others," a Live Nation spokeswoman told the WSJ. "Artists get paid based on competitive bidding, and it would be strange, to say the least, for antitrust agencies to say that anyone should pay artists less."

Live Nation ( LYV ) is set to report Q3 results on Thursday.

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U.S. stocks and bonds on Wednesday rose after the Federal Reserve held interest rates steady as widely anticipated.

The Nasdaq ( COMP.IND ) ended up 1.64%. The S&P 500 ( SP500 ) added 1.05%. The Dow ( DJI ) gained 0.67%.

The Fed held the federal funds rate steady at 5.25% to 5.50%. More on that and the treasury refunding announcement on Wednesday’s edition of Wall Street Lunch.

The 10-year treasury yield ( US10Y ) was down 12 basis points to 4.76%. The 2-year yield ( US2Y ) was down 11 basis points to 4.96%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the green. The Dow is up 0.3%, the S&P 500 is up 0.4% and the Nasdaq is up 0.7%. Crude oil is up 1.6%.

In the world markets, the FTSE 100 is up 1.25% and the DAX is up 1.5%.

The biggest movers for the day premarket: Roku (NASDAQ: ROKU ) is up 19% following mixed Q3 results and a better-than-expected Q4 sales outlook . And SolarEdge Technologies (NASDAQ: SEDG ) is down 17% after reporting lower Q3 adjusted earnings and guiding Q4 revenues below analyst estimates.

On today’s economic calendar

• 830 initial jobless claims

• 10am factory orders

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