Disney & Comcast Could Head To Courts To Finalise Hulu Valuation
Last month, it was revealed that Disney and Comcast were still locked in negotiations over the final valuation of Hulu, of which Disney owns two-thirds and Comcast owns a third. Disney paid Comcast over $8.61 billion as an initial payment for Comcast’s stake while the final valuation was being worked out.
The two companies agreed last year that Disney would purchase Comcast’s remaining stake in the streaming service Hulu as part of a put/call agreement placed in a deal between them in 2019 when Disney purchased 20th Century Fox, which would mean in 2024, Comcast or Disney could force Disney to buy out Comcast’s stake, for a fair market value, which would be a minimum of $27.5 billion. The valuation will be assessed as of September 30th 2024, with both companies hiring different companies to value Hulu, with Disney hiring JP Morgan and Comcast hiring Morgan Stanley.
JP Morgan has valued Hulu at $27.5 billion, while Morgan Stanley has valued Hulu at more than $40 billion. Because the valuations are more than 10% apart, a third independent party, RBC Capital, has been brought in to calculate the value of Hulu, and that would determine how much Disney would have to pay.
According to a new report from the Wall Street Journal, Disney and Comcast are in the middle of a significant disagreement over how to value the streaming service and it has resulted in the talks going off course. It’s possible that this issue might end up going to court to resolve, though its RBC Capital’s role to act as a referee in this situation.
Roger’s Take: It’s unfortunate that the two companies haven’t been able to come to an agreement, especially since the deal they signed back in 2019 had all the steps in place on how this would be handled. Naturally, Comcast wants as much money as possible, and Disney wants to pay as little as possible. However, it also benefits Comcast to delay the final purchase of its stake in Hulu, since it will impact on how Disney can move forward with its plans to merge its streaming platforms together, likely eventually, and Comcast has already had a nice big cheque of over $8 billion to keep it happy in the meantime.
I wouldn’t be surprised to see this end up in court, which will likely put a big delay on the eventual merger. It’s also frustrating to think this situation still hasn’t been resolved after all the years, but when it comes to paying out billions of dollars, no wonder both sides can’t agree, but that kinda defeats the point of the third-party valuation. Plus, if it did go to court, it would be both costly and time-consuming for both companies.
Do you think Comcast and Disney are going to get a Hulu deal sorted? Let me know on social media!
Roger Palmer
Related Article
Disney Maintains Lead On Nielsen’s Media Distributor Gauge In May
Hulu Orders New Comedy Pilot “Mid-Century Modern”
