Bloomberg reported Friday that Disney has curtailed Hulu’s international expansion because Disney does not want to significantly increase Hulu’s valuation which would trigger a higher eventual payout to minority owner Comcast. Hulu’s valuation in early 2024 will set the payout Disney owes Comcast for its one-third share in Hulu under a deal struck in May, 2019. Comcast’s Hulu stake is worth at least $5.8 billion under the deal.

Bloomberg said that Hulu’s late 2019 proposal to Disney to expand internationally was initially supported, but then in August 2020 Disney switched gears and decided to embrace Star as the international brand for its non-U.S. entertainment service. Disney acquired Star, the India media company, as part of its $71 billion Fox deal. Bloomberg also cited Disney’s concerns about extending Hulu’s losses, Covid’s negative impact on Disney’s various businesses, and its commitment of resources to Disney+’s international expansion as other reasons it decided not to support Hulu’s international expansion.

Bloomberg also reported that Comcast’s NBCUniversal has asked Disney about selling Hulu or operating it as a partnership, Several private equity companies have also approached Disney, but Disney has declined all interest.

Comcast’s interest is noteworthy because back in May, 2018, while the Fox-Disney-Comcast takeover drama was unfolding, I wrote that at a minimum, Comcast should try to acquire Disney’s Hulu stake, not the reverse, which is how things ultimately worked out. Hulu would have given Comcast a strong entry for the streaming wars, incremental revenue of at least $6 billion (including subscriptions and advertising and benefits to Peacock) and improved competitive positioning. It would have also created a significant tailwind for Peacock’s eventual launch.

With its overture to Disney, Comcast may now be recognizing some of these benefits, which may be even more important now. In the 2+ years since the Disney-Fox deal was struck, the shift to on-demand, connected TV based viewing has accelerated, as has the decline of linear TV consumption and rise of cord-cutting. Comcast’s successful launch of Peacock and its rollout of Flex streaming media player are contributing to the company’s repositioning, but owning Hulu could really turbocharge this transition. Comcast could embrace Hulu as an international brand, complimenting Sky, and creating even more upside.

Hulu is in the familiar position of seeing competitors like Netflix and Amazon fully capitalize on the shift to streaming, while its ambitions are constrained. For sure there’s still plenty of growth left in the U.S., but as Netflix has shown, international is a far bigger universe. Ultimately scale matters a lot for content acquisition, brand building and valuation. Disney seems to recognize this. Since it is disincented from growing Hulu’s value, Hulu is like to remain the strongest domestic-only streaming brand, at least until 2024.