Disney Expects Its Battle With Comcast Over Hulu’s Value to be Resolved in Fiscal 2025
On the day that The Walt Disney Company reached profitability in streaming for the first time, Deadline reported that the company is still at an impasse with Comcast over its purchase of Hulu.
As a quick recap, Disney decided to buy out Comcast’s stake in the streaming service earlier this year and take full ownership of Hulu. Under a previous 2019 agreement, Disney owned 66% of the streamer, while Comcast owned the final third.
The question, then, became how much was Comcast’s stake in the streaming service worth.
Under the 2019 agreement, Hulu could be valued at no lower than $27.5 billion. At that level, Comcast’s stake was worth roughly $8.6 billion. The company, however, believed that Hulu was worth more.
In order to arrive at a fair valuation, Disney and Comcast each turned to a different financial institution. Subsequently, JPMorgan valued Hulu at $27.5 billion for Disney. Morgan Stanley, meanwhile, valued Hulu at $40 billion for Comcast.
The Parties Are in the Midst of Arbitration
The discrepancy between the two numbers likely comes from each side’s definition of value. Disney has argued that Hulu should be valued at what the streamer is currently worth the company based on its revenue, expenses, and margins.
Comcast, on the other hand, has long argued that the streamer should be valued at the price that it would fetch on the open market.
Under the terms of the 2019 agreement, the two sides then turned to a third party to adjudicate Hulu’s value.
Late last year, Disney paid Comcast the $8.6 billion that it minimally owed for Hulu. The question now is whether the company owes more.
Disney Expects a Resolution in Fiscal 2025
In SEC filings today, Disney revealed that based on Hulu’s previous valuations, the company will still owe somewhere between zero (if Disney’s valuation is correct) and $5 billion (if Comcast’s is right).
While today’s filings mostly just rehashed the history of Hulu, there were a few new revelations.
Most notably, Disney expects the dispute to be resolved in fiscal 2025, which starts this October.
“The outcome of the arbitration is uncertain and we cannot reasonably estimate the impact of the arbitration on the appraisal process, and thus any impact on the determination of Hulu’s equity fair value and any additional amount we may be required to pay to acquire NBCU’s interest in Hulu,” the filings said.
Also, Disney’s filings revealed that their appraiser actually valued Hulu below its guaranteed floor value, while Comast’s appraiser valued it significantly higher.
In the end, the arbitration process will play out, Disney will pay Comcast (or not, depending on the ruling), and Hulu will remain an integral part of Disney’s streaming strategy.
Hopefully, the stand-off will be resolved soon.
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