Unable to Reach a Deal, Disney and Comcast Will Seek a Third Party For a Valuation of Hulu
Bob Iger made perhaps the biggest decision since his return to The Walt Disney Company in 2022 last year when he decided that Disney would buy out Comacast’s stake in Hulu and fully integrate the streamer into Disney+.
Under a 2019 agreement, Disney currently owns 66% of Hulu, while rival Comcast owns the last third. Per the agreement, however, Disney has the option to buy out Comcast’s share of the streamer beginning in 2024. Additionally, Comcast can force Disney to buy its stake.
Photo: Disney+
Prior to Iger’s announcement that Disney wanted complete ownership of Hulu, observers and investors alike had speculated that Disney could look to unload their stake in the streaming service, perhaps even selling to Comcast.
NBC News
Eventually, however, Iger decided it was in Disney’s best interest to own Hulu.
What Is Hulu Worth?
The question, then, became not who would own Hulu but how much the streaming service (and more specifically, Comcast’s stake in the streamer) was worth.
Per the 2019 agreement, Hulu can be valued at no lower than $27.5 billion. In order to arrive at a fair valuation for the streaming service, each party turned to a different financial institution to provide a valuation of Hulu.
Photo: Deadline
According to Reuters, JPMorgan has subsequently valued Hulu at $27.5 billion for Disney, which just so happens to be the floor value of the streamer per the 2019 agreement. Morgan Stanley, meanwhile, valued Hulu at $40 billion for Comcast.
A Third Party Is Needed
As the terms of their initial agreement indicate, with the two sides more than 10% apart, Disney and Comcast will now hire an investment bank to independently value Hulu.
Photo: Disney+
After the third party appraises Hulu, Disney, and Comcast will take that number and average it with either the JPMorgan or Morgan Stanley valuation, depending on which is closer.
The average of those two valuations will then be the price at which Comcast’s stake is sold. If the third-party appraisal comes in below $27.5 billion, the final valuation will be $27.5 billion. Hulu can not be valued lower than that per the 2019 agreement.
Image Credit: Disney
While the final valuation of Hulu may matter to both Comcast and Disney, the consumer’s end result will be the same. Going forward, Disney will be the sole owner of Hulu.
