When Comcast is able to sell its stake in streaming video joint venture Hulu, 21st Century Fox would be a logical buyer, according to Credit Suisse analyst Omar Sheikh.
In a new report, Sheikh says the kind of targeted advertising Hulu focuses on represents an opportunity for companies in the TV business.
“We believe there is a more than $100 billion domestic revenue opportunity for targeted TV advertising long term, which vertically integrated networks/distributors will be in a strong position to exploit, given the access to viewing and other data that platforms could provide,” Sheikh said. “We would therefore argue that it would make sense for Fox to acquire Comcast’s stake in Hulu, if it becomes available, subject to valuation and appropriate programming supply agreements.”
Sheikh says Hulu is currently valued at $5.8 billion but says he thinks its long-term value is substantially higher.
Comcast will be able to sell its 30% stake in Hulu at the end of the year.
Sheikh also thinks that the OpenAP targeted advertising consortium formed by Fox, Viacom and Time Warner’s Turner unit, will help create value for the TV business over the next 2-3 years.
“As targeted linear advertising builds scale… U.S. TV ad growth can accelerate to 5%-7% per year long term. That would be good for Fox and other big traditional media companies with television networks."