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Disney has agreed to acquire the 33 per cent of Hulu that it does not own from rival Comcast, firing the starting gun on what is expected to be heated negotiations between the media giants over the valuation of the popular US streaming service.
In a statement on Wednesday, Disney said it was prepared to pay $8.6bn by December 1 for the remaining stake, which would value Hulu at $27.5bn. But that is expected to be just the floor for upcoming negotiations over Hulu’s valuation. Disney expects the appraisal to be completed in 2024.
Comcast chief executive Brian Roberts recently said he believed Hulu was worth $60bn.
The question of what Hulu will cost comes as Bob Iger, Disney’s chief executive, is under pressure to cut spending. Activist investor Nelson Peltz has recently upped his stake in the entertainment giant and is looking to push for board seats, the Financial Times has reported. If it paid Comcast $8.6bn, Disney would have roughly $3bn in cash on hand, so a significant upward revision to Hulu’s valuation could weigh on its balance sheet.
Hulu, home to shows such as Only Murders in the Building and The Bear, has been in limbo since 2019, when Disney lifted its stake to 67 per cent through its blockbuster acquisition of 21st Century Fox.
Comcast said in a statement: “We look forward to the appraisal process and the determination of Hulu’s fair market value which we expect will reflect the extraordinary value of the business.”
Roberts has described Hulu as a “kingmaker’s asset”. Comcast has described the negotiation with Disney as “amicable”, though analysts say the two companies are expected to have widely different estimates of what Hulu is worth.
“I think if you were selling all of this as is there’d be a line of bidders around the block to actually buy all the content, all the bundling of Hulu,” Roberts told a Goldman Sachs conference in September. Hulu has about 48mn subscribers, according to Disney’s most recent earnings filing.
Hulu’s joint ownership structure has resulted in an uneasy, years-long saga between Disney and Comcast, which are competing against each other for subscribers to their own separate streaming services.
Iger, who returned to Disney last year in the hope of turning around its fortunes, floated the notion as recently as February that Hulu was not essential to his company, calling its programming “undifferentiated”. However, he later backtracked and said he was planning to hold on to Hulu and integrate it within the Disney+ streaming service.
Peltz, the billionaire founder of activist firm Trian Partners, has recently increased its Disney stake to a position worth more than $2.5bn, making it one of the group’s largest shareholders, the FT reported.
Disney shares have dropped by 6.7 per cent this year, underperforming the broader stock market. They were little-changed on Wednesday.
