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Disney, Comcast still too far apart on Hulu’s valuation

Comcast believes Hulu is worth more than $40 billion, while Disney wants to stick closer to the guaranteed floor value of $27.5 billion.

Comcast believes Hulu is worth more than $40 billion, while Disney wants to stick closer to the guaranteed floor value of $27.5 billion.

A billboard for the Hulu series "Futurama" as seen in Portland, Oregon. (Photo by Matthew Keys for The Desk)
A billboard for the Hulu series “Futurama” as seen in Portland, Oregon. (Photo by Matthew Keys for The Desk)

The Walt Disney Company and Comcast Corporation have reached a point of contention over how much Hulu is actually worth as Disney continues to pursue its full acquisition of the streaming service, according to a report.

On Friday, the Wall Street Journal said both sides had hired banks to appraise the value of the streaming service, with Comcast’s financial advisors suggesting Hulu is worth as much as $40 billion and Disney’s bankers putting Hulu’s valuation around $27.5 billion.

Disney owns 66 percent of the streaming service, which started as a joint venture between it, Comcast-owned NBC Universal and Fox Corporation nearly two decades ago. At the time, all three sides had an equal stake in the venture — 30 percent — with a rotating list of minority shareholders owning the remaining 10 percent.

Over time, Disney has gobbled up a controlling position in Hulu, acquiring Fox Corporation’s share through a broader purchase of Fox film, TV studio and cable network assets in 2019. WarnerMedia sold its 10 percent stake in Hulu to Disney and Comcast around the same time, giving Disney 67 percent of Hulu and a controlling position in the company, with Comcast owning 33 percent.

Disney exercised an option to buy Comcast out of Hulu last year, and has made an initial payment of more than $8.6 billion toward that effort last year. The guaranteed floor value — or the minimum amount Disney will pay for Hulu — was set at $27.5 billion.

Unsurprisingly, Comcast believes Hulu is worth more than that. The service has grown to 50 million users under Disney’s control, and Disney continues to make significant investments in content, marketing and bundles that some financial analysts believe have driven up the value of the service. It also makes Comcast’s 33 percent stake in Hulu more valuable, too.

Disney and Comcast have referred their appraisal values to RBC Capital, which will try to find some middle ground. RBC Capital will come up with its own value for Hulu, and Disney will have to average that value against its $26.5 billion estimate, the Journal reported. That formula will determine the actual amount Disney is expected to pay for Hulu, the newspaper reported.

Citing “people familiar with the situation,” the Journal stated that Comcast and Disney could wind up in a “court battle” over the valuation of Hulu, though the article published on Friday didn’t explain why litigation was an option given the clear terms of the sale, including the dispute resolution process.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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