Disney to buy Comcast’s Hulu stake

Disney on Wednesday announced it will acquire the remaining 33% stake in Hulu held by Comcast’s NBCUniversal.

The two already had an arrangement where Comcast could sell to Disney, and Comcast exercised its right under the earlier agreement Wednesday, Disney said.

Disney currently holds a 67% stake in Hulu.

Under terms of the arrangement, Disney will pay NBCU approximately $8.61 billion – reflecting NBCU’s percentage of the $27.5 billion guaranteed floor value that was set when the companies first made the agreement in 2019.  However, that price could change.  The companies agreed to an appraisal process to assess Hulu’s equity fair value as of September 30, 203. If that determines Hulu’s value is more than $27.5 billion, Disney will pay NBCU the difference between the floor value of the stake and its fair-market value.

Disney expects the appraisal process to be completed during 2024. Disney said the acquisition of Comcast’s Hulu stake to “will further Disney’s streaming objectives.”

Since 2019 Hulu has grown to a current base of 44 million for its AVOD/SVOD service. Virtual MVPD Hulu + Live TV counted 4.3 million subscribers as of the end of Disney’s fiscal year 2023 third quarter

In September Comcast and Disney announced they were bumping up the timeline to kick off the sale process for Hulu, accelerating the original January 2024 date to the end of September 2023.

Comcast CEO Brian Roberts discussed the new date and sale process during a September investor conference, suggesting the company could be poised for a much higher payday than the tentative value ascribed to Hulu in 2019.

“You know, the minimum number of $27.5 [billion] that people have bandied about, that was just a hypothetical that we picked five years ago because Disney had control of the company,” Roberts said at the investor event. “The company is way more valuable today than it was then.”

The appraisal process needs to value the assets based on what a hypothetical auction or sale process and what Comcast, Disney or hypothetical suitors such as tech players would pay for it. Roberts pointed to Hulu’s position in the streaming space, as well as content and bundling benefits a buyer would get as contributing to value.

“No one’s ever sold a pure play, or auctioned off a pure play streaming asset that’s in this kind of position. That’s a scarce, kingmaker asset, whoever would get that,” Roberts commented.