Walt Disney Co
What Happened: The two media giants disagree over the stake valuation that Disney is set to acquire from Comcast, Reuters reported, citing people familiar with the matter.
This move is in line with the terms of the deal they struck for Hulu last year, which stipulates that if the valuation assessments by their respective banks, JPMorgan Chase and Morgan Stanley, differ significantly, they can hire a financial advisor to resolve the issue.
JPMorgan valued Hulu for Disney at approximately $27.5 billion, while Morgan Stanley valued it for Comcast at over $40 billion. As the two valuations are more than 10% apart, Disney and Comcast are now in discussions to appoint an investment bank for an independent valuation.
According to the agreement terms, if the third appraisal aligns closest with Disney's bank valuation, the deal will be finalized at the average of those two valuations. Likewise, if the third appraisal aligns closest with Comcast's bank valuation, the deal will be concluded at the average of those two valuations.
If the average of the third appraisal falls below $27.5 billion, the final valuation will be set at $27.5 billion, the report noted.
Why It Matters: Hulu is known for its hit original shows like "Shogun," "The Bear," "Prey," and "Only Murders in the Building." The platform witnessed its subscriber base reach 49.7 million by December 2023, marking a 2% increase from the September quarter.
Disney has already integrated Hulu into its Disney+ streaming platform, which hosts popular titles like "Moana" and "Frozen."
The valuation dispute arises from a deal struck in 2019, following Disney's $71 billion takeover of 21st Century Fox's assets, including its minority stake in Hulu. This deal gave Disney majority control over Hulu, while Comcast retained its 33% stake, anticipating a significant increase in its value by 2024.
Disney's acquisition of the remaining 33% stake in Hulu was announced in November 2023, with a minimum payment of $8.6 billion to Comcast. The current valuation dispute is a crucial step in finalizing this acquisition.
