Days after the streaming platform Hulu co-owned by Disney and Comcast went on the market, Disney says that it plans to pay $8.6 billion or more to buy the remaining 33% stake in Hulu currently held by Comcast.
As reported by Deadline, “Disney said the $8.61 billion represents NBCU’s percentage of the $27.5 billion ‘guaranteed floor value' for Hulu that was established when Disney and Comcast entered in to their 2019 agreement, ‘minus the anticipated outstanding capital call contributions payable by NBCU to Disney.'”
Disney added, “If the value is ultimately determined to be greater than the guaranteed floor value, Disney will pay NBCU its percentage of the difference between the equity fair value and the guaranteed floor value.”
Comcast CEO Brian Roberts says the $27.5 billion estimated value of Hulu is “just a hypothetical,” suggesting that Hulu's value — and Comcast's stake — is worth much more.
In an August SEC filing, Disney said: “The Company and NBCU have been conducting a confidential arbitration concerning the parties’ rights and responsibilities under the Hulu limited liability company agreement. The Company expects a decision in that arbitration within the next quarter. The outcome of the arbitration is uncertain and we cannot reasonably estimate the amount of any potential loss or the impact on the determination of the value of Hulu’s equity pursuant to the Hulu limited liability company agreement and thus the amount we may be required to pay to acquire NBCU’s interest in Hulu.”
Hulu Is One of the Most Valuable Streamers Out There
Hulu, which launched in late 2007, has become one of the most valuable streamers with regard to original and licensed content. Not only does the streamer boast a collection of Disney content and ABC programming, Disney's acquisition of 20th Century Fox assets in 2019 means that Hulu added Fox movies, TV programming (like The Simpsons), and original movies such as the Predator prequel Prey (pictured, above) to its library. Hulu offers various tiers of service with or without ads, and also Hulu Plus Live — which includes a cloud DVR and live programming — that can be bundled with Disney+ and ESPN+.
Roberts said that the appraiser must value Comcast's stake as if Hulu were to be sold “as is… as a business …through some hypothetical auction or sale process to get that maximization. That could be a sealed bid. It includes Comcast as a bidder. Hypothetically, Disney is a bidder or any other company, tech company and the like as a bidder. What you’re actually appraising therefore, and this is really the point, is more than Hulu, a lot more than Hulu, in my opinion, because you start with Hulu as a standalone. Very successful. The numbers are mostly private, so we’ll leave that up to the appraisal process. Second, 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.”
When Deadline asked what Roberts plans to do with the cash if Disney buys Comcast's remaining stake in the streamer, Roberts said the “plan is to return it to shareholders.”