Disney announced on Wednesday that it will buy the third stake in Hulu from Comcast.The entertainment giant will thus take control of the streaming platform, which launched in 2008. The deal requires Disney to pay at least $8.6 billion, although the two parties will negotiate the price of the shares in the coming months.
But Disney might end up paying more than that. Both Disney and Comcast agreed to an appraisal process that will evaluate Hulu’s equity fair value as of September 30th. If Comcast’s stake is determined “to be greater than the guaranteed floor value,” Disney will have to pay Comcast the difference.
Hulu has almost 50 million subscribers in the United States. The platform is one of the strong cards in the digital strategy of Bob Iger, who returned to the helm of Disney last year after retiring. The iconic company leader believes the platform should be added to the Disney+ service: it was one of his priorities in his first turn as CEO.
Disney says the timing of the appraisal process is “uncertain,” but it expects it to be completed sometime next year. This all stems from the deal Disney made with Comcast to buy its one-third stake in Hulu in 2019.
At the time, the two companies agreed upon a minimum valuation of $27.5 billion for Hulu. “That was just a hypothetical that we picked five years ago,” said Comcast CEO Brian Roberts during an investors conference in September. “The company is way more valuable today than it was then.”
With Hulu barely seeing a shift in subscribers last quarter, Disney announced a price hike across all of its streaming services and hinted at a password-sharing crackdown. In October, Hulu’s ad-free service went from $14.99 / month to $17.99 / month, while Hulu with Live TV will jump from $68.99 / month to $75.99 / month.
Disney has chosen JPMorgan to do the business valuation, while Comcast has hired Morgan Stanley for the job. If the figure presented by each side vary by more than 10%, the companies have agreed to ask a third party for the appraisal.
