Media

Disney may have to pay $5B more for Comcast’s Hulu stake to resolve dispute

By
Reuters
Published Aug. 7, 2024, 1:02 p.m. ET

Walt Disney said Wednesday it may have to pay up to $5 billion more to buy Comcast’s minority stake in Hulu, if an appraiser were to agree with Comcast’s assessment that the stake should be valued at more than $40 billion.

Earl♕ier this year, Disney and Comcast hired investment bank RBC Capital as the independent appraiser to resolve a dispute over how to value the 33% stake in the streaming platform, according to people familiar with the matter.

Reuters was first to report in May t☂hat Disney and Comcast were seeking to hire an independent adviser.

Disney reported a profit in its streaming division, which includes the Disney+ and ESPN+ platforms.
Disney and Comcast hired an independent appraiser to resolve a dispute over how to value the 33% stake in the streaming platform. Above, Disney personalities celebrate the official launch of Hulu on Disney+ in April. AFP via Getty Images

The two sides have entered into⛎ arbitration proceedings to resolve the dispute and a final decision is expected in fiscal 2025.

Disney and Comcast signed an agreement for Hulu in 2019 with an option strike date of January 2024, after Disney’s $71 billion takeover of Fox’s assets, including its minority stake in Hulu.

The deal gave Disney majoꦛrity control over Hulu as it already owned a 33% stake. Comcast retained its stake at t♎he time, believing that its value would rise significantly by 2024.

In November last year, Disney agreed to take control of Hulu and pay Comcast at least $8.6 billion🌠 for the remaining 33% stake, after Comcast triggered the deal as pa🤡rt of the 2019 agreement.

Disney said Wednesday if the independent adviser’s valuation is equal to or below the guaranteed floor value of $27.5 billion, it would not have to pay Comcast anything more than the $8.6 billion that it paid out last year.

If RBC’s appraisal is in line with Comcast’s evaluation, Disney will have to pay Comcast $5 billion more. If it falls between the earlier evaluations by both sides, Disney would have to pay anywhere between $0 and about $5 billion.

Comcast logo
In November last year, Disney agreed to take control of Hulu and pay Comcast at least $8.6 billion for the remaining 33% stake, after Comcast triggered the deal as part of the 2019 agreement. Brian Zak/NY Post

JPMorgan, Disney’s adviser on this deal, valued Hulu at less than $27.5 billion, which is the floor valuation that the companies had set in their 2019 “put-call” agreement.

Morgan Stanley, which is Comcast’s adviser, valued Hulu at $40.8 billion.

In regulatory filings last year, ;Disney and Comcast had said if the valuation reached by their ba✨nಞks were within 10% of each other, a deal will take place at a valuation that is the average of the two appraisals.

Since that was more than 10% apart, Co🎀mcast and Disney picked RBC to carry out an🍨 independent appraisal.