Disney & Comcast “Tens Of Billions” Apart Over Value Of Hulu
Ever since Disney and Comcast made an agreement in 2019 for the future of Hulu, there has been a huge cloud over the streaming service, over what would happen to Hulu. Will Disney buy out Comcast’s 33%? Will Disney+ and Hulu merge? Will Comcast buy out Disney’s 66% stake in Hulu? According to The Wall Street Journal, there are some major issues between Disney and Comcast over the future of Hulu.
Earlier this year, Disney CEO Bob Iger said everything was on the table with regards to potentially selling the streaming platform, while Comcast CEO Brian Roberts said he expected Disney to pay them a huge cheque for their share in the company.
Then, during the latest quarterly finanical results call, Disney announced it would be offering a one app experience in the United States later this year, with Hulu becoming available within Disney+ as a tile. Very little has been revealed about how all of this is going to work, but we do know that if you are a subscriber of Hulu or have the Disney Streaming Bundle, there will soon be a Hulu tile within Disney+ in the United States, offering selected content within Disney+.
Leading many to speculate, that once Disney has finalised its deal with Comcast, it will continue with a full blown merger of the platforms, similar to HBO Max/Discovery+ and Paramount+/Showtime. But until Disney has full control over Hulu, this is a halfway measure, to provide Disney+ with the general entertainment content it needs to grow, while also technically keeping Hulu seperate at the moment.
The WSJ report is suggesting that Disney has been working on adding a Hulu tile to Disney+ for “more than a year.” Which ties in with some other reports on the streaming team developing the new look Disney+ since last year. Apparently the project has been given a Marvel-themed name, “Project Hulk”, which is obviously a reference to the Big Green Monster aka Hulu. And apparently people at Comcast were unaware of Disney’s plans for Hulu to be intergrated into Disney+ (though it’s hardly a surprise!)
Back in 2019, Disney and Comcast made an agreement following Disney’s purchase of 20th Century Fox, which resulted in Disney becoming a majority stakeholder with 60%. AOL Time Warner promptly sold its 10% stake to both Comcast and Disney.
Part of the agreement, saw Disney taking over operational control of Hulu, and in 2024, either company could request that Disney buys out its stake for its fair market value at that future time. Independent experts will assess Hulu’s fair market value, but Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5 billion. Though if over the years, Comcast doesn’t continue to invest in Hulu, it would have its stake reduced, though it will never be less than 21%, which means that Comcast is guaranteed to receive at least $5.8 billion under the put/call agreement.
One issue that Comcast has had, was that Disney failed to launch Hulu internationally, instead launching the Star tile within Disney+, which Comcast claims has hurt Hulu and there is an arbitration case underway, which feature claims of legal threats as Comcast state that Disney hasn’t fullfilled its promises for Hulu and want damages for this. WSJ is reporting that Disney believes it made no such promise and that launching one would have been too costly.
Both sides want to sort out a deal for Hulu, however Comcast is valuing Hulu much higher than Disney. Comcast logically want Hulu to be worth much more, since they want a bigger 33% stake. However, as you’d expect, Disney is trying to value Hulu lower, so it has to pay Comcast less. There is apparently a huge gap of tens of billions of dollars between where the two companies valuations are. Back in 2021, Comcast was saying it was valuing Hulu at $70 billion, which would mean they would want about $26 billion for their third of the stream. Lets be honest, this isn’t realistic, but from their point of view, you can see why Comcast would be trying to value Hulu higher.
In early 2024, Comcast can force Disney to buy them out, but it’s likely an independant third party will be brought in to assess its true value and the two sides can finalise a deal.
It has also been revealed that Comcast has stopped paying its share to keep Hulu running, pulling back its next-day content from NBC Universal and this has resulted in Disney needing to give Hulu “the equivalent of a bridge loan.” It’s unknown when Comcast stopped funding Hulu, but this might play into the 2019 contract where Comcast’s stake in the company is reduced if it cuts its investing.
With six months until either company can force Disney to buy out Comcast’s stake in Hulu, we will likely see more issues between the companies, as one tries to make more money, while the other wants to pay less. Ultimately, they will meet at one point, but it does look like a full-blown Hulu/Disney+ merger will not happen this year.
What do you think is going to happen between Comcast and Disney? Let us know on social media!