Disney And Comcast Are ‘Tens of Billions’ Apart on Hulu Valuation
The biggest announcement made on The Walt Disney Company’s Q2 earnings call was that Disney planned to combine the libraries of Hulu and Disney+ for a “one-app experience.”
The announcement signaled to Wall Street that Disney intended to buy out the 33% of Hulu that they do not currently own from Comcast.
The joint ownership of Hulu between Disney and Comcast has been one of the streaming industry’s biggest Gordian Knots.
Disney Changes Course
Under a 2019 agreement, Disney, which owns two-thirds of the streaming service, has the option to buy out Comcast’s minority stake in Hulu. Conversely, Comcast can require that Disney do so.
Prior to Iger’s “one-app” announcement, there was widespread speculation that Disney would consider selling their stake in Hulu, either to Comcast or another entity.
Since that time, however, things have drastically changed. Iger has gone from stating that “everything is on the table” in regard to the future of the streaming service to saying that “There seems to be real value in having general entertainment combined with Disney+.”
Comcast CEO Brian Roberts, meanwhile, told investors that “it’s more likely than not” that the company will sell its stake to Disney.
What Is Hulu Worth?
The question now surrounding Hulu is how much the streamer is worth. According to Disney and Comcast’s agreement, the streaming service can be valued at no lower than $27.5 billion when Disney buys Comcast out.
As of October 1, Disney valued Comcast’s stake at $8.7 billion, which would put the entire service below the target.
For their part, Comcast belives that the streamer’s value should be based on what it could fetch on the open market.
“The job is to then give us one-third of that value,” Roberts said. “So I think we have a very valuable position.”
What’s Next
Early next year, each company will do an assessment of Hulu’s value again. If the two sides remain apart on the streaming service’s worth, an independent third party will be brought in to make a determination.
Meanwhile, as the two companies continue their standoff, Comcast has stopped funding Hulu although. This necessitated Disney to prove the equivalent of a bridge loan to the streaming service.
“These two companies have a long-term, intricate dance of a relationship.” Bernard Gershon, a media consultant and former Disney executive says. “There are a ton of levers that can be pulled to get to a deal.”
In the end, Disney will likely be the sole owner of Hulu. What it will cost the media giant, however, remains to be seen.
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