Back in 2019, Disney purchased 20th Century Fox, which resulted in it becoming the majority owner of Hulu, as both Disney and Fox-owned 30% of the streaming platform. With Comcast holding onto 30%, and AOL quickly sold its remaining 10%, leaving just Comcast and Disney as co-owners. A deal was made between the two companies that saw Disney take operational control over Hulu, and since Comcast didn’t want to sell Hulu at the time, since it believed the value of the company was going to be higher in five years. The two companies made a put/call deal in place that meant in 2024, either company could force Disney to buy out Comcast’s stake.
An initial minimum valuation of 27.5 billion dollars was made at the time, though Comcast’s stake in the company could be reduced to a minimum of 21%, if it stopped investing in Hulu, which it is believed Comcast stopped doing, forcing Disney to pay out more money to run Hulu.
In September, it was revealed that the two companies had agreed to pull forward the pull/put date on the contract by two months, as both companies want to get the situation resolved. Comcast wants to invest the money from Hulu into its business, and Disney is planning on merging Hulu into Disney+, to offer a single entertainment streaming service to be able to go toe-to-toe with Netflix, as it has done internationally.
Last month, it was revealed that both Disney and Comcast have hired investment banks to value Hulu. Disney has hired JPMorgan Chase to value its streaming service, while Morgan Stanley will do the same for Comcast. The two valuations will then be compared, and if they are within 10%, the average of the two banks’ determinations will be the price at which Hulu is valued, as of September 30th 2023. If they are far apart on their valuation, a third company will be brought in to come up with a final price.
And since its the first of November, the put/call process can now be triggered, and according to CNBC Reporter, Alex Sherman and David Faber, Disney and Comcast have triggered their options to start the sale valuation process. (CNBC is owned by Comcast).
While there has been no official announcement regarding the triggering of the process, it’s likely, we will get an update on this next week during Disney’s quarterly financial investors call, but the full buyout might take a while to sort out, depending on how far apart the valuations are. Analyst’s predictions for what Hulu could be valued at vary greatly. Comcast would obviously want the valuation to be as high as possible, while Disney would want it as low as possible. With Disney poised to potentially be on the hook to spend anything from $7 billion to $15 billion on Comcast’s stake in Hulu, Disney has been looking at potentially selling some assets, including its Star business in India, some local ABC channels in the US and also part of ESPN.
Comcast has been a continuous thorn in the side of Bob Iger since he announced that he was going to purchase 20th Century Fox, as Comcast put in a rival bid, forcing Disney to spend much more money on 20th Century Fox than they initially wanted. Comcast was able to secure Sky in the process, but with the Hulu deal also in place, Disney has been unable to unlock the full potential of Disney+ in the United States, as it has done internationally, because Disney had to maintain Hulu as an ongoing business, with its studios FX, ABC, National Geographic and 20th Century Studios content being released on Hulu.
Disney has plans to start incorporating Hulu content into Disney+ later this year and has stated it could do so, even with Comcast as a partial owner, since you’ll still need a Hulu subscription to access select content within Disney+. As we’ve seen with other mergers between apps, like HBO Max/Discovery+ and Paramount+/Showtime, these mergers often take a while to be completed, so it’s likely we will see a full merger between Hulu and Disney+ taking over a year, but hopefully, we do get more details on what’s known as “Project Hulk” pretty soon.
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