Hulu Stake Among Items Under Review At AT&T As WarnerMedia Legal Clouds Part

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A day after a federal appeals court backed its $81 billion acquisition of Time Warner and the Department of Justice said it would abandon its legal challenges, AT&T renewed its vow to scrutinize its balance sheet to create more financial maneuverability.

Speaking today at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco, CFO John Stephens said the company is in a newly intensified phase of its review, as it has signaled to Wall Street in recent months. While he didn’t specifically name the 10% stake in Hulu that came along with Time Warner in the acquisition, Stephens made it clear that virtually no assets are off the table.

The management team is “actively working on an extensive real estate portfolio — administrative buildings, headquarters buildings, land, as well as looking at our entire $500 billion total asset balance sheet,” Stephens said. “If you think about it from a capability perspective, if you can find 2% of those assets to sell, that’s $10 billion. So, this is infinitely doable.” He added, “We are very comfortable that we can get these things accomplished without interrupting the operations of the business.”

During a meeting last November with Wall Street analysts, Stephens offered similar comments to today’s, reporting that the company had been seeking to identify “opportunities to monetize assets that are not essential” to its main strategic goals. Among the items he mentioned on that occasion was the Hulu stake.

Disney, which is closing in on final regulatory approval of its purchase of most of 21st Century Fox, is poised to own 60% of Hulu, up from its current level of 30%. The subscription streaming service and live TV service, which launched in 2007, has long operated with three principal owners: Comcast, Disney and Fox. In 2016, Time Warner bought 10% at a valuation of $5.8 billion. Hulu has more recently been valued at north of $9 billion.

In 2019, AT&T is not only pushing to retire $30 billion of remaining debt related to the Time Warner deal but also to free up resources to support an ambitious streaming service that will unite HBO, Warner Bros and Turner properties and launch by year-end. Disney, meanwhile, has positioned Hulu as the third leg of its streaming stool, with family-friendly Disney+ and ESPN+ the other two.

Variety reported discussions are being held between AT&T and Disney about the latter acquiring an additional 10% of Hulu, which matches up with the sentiment from Stephens and the importance of Hulu in Disney’s long-term planning. Comcast has indicated it has no near-term intention of unloading its 30% stake.

Reps from Hulu and its stakeholders declined comment when contacted by Deadline, but one source with knowledge of the situation said talks between Disney and AT&T would make sense given the companies’ stated strategic goals.

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