Valuation Dispute Threatens Disney’s Full Acquisition of Hulu

Disney Hulu Valuation Dispute Threatens Acquisition of Hulu | CIO Women Magazine

Source – USNews.com

Walt Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA) are locked in a disagreement over the valuation of Comcast’s 33% stake in Hulu, a clash that could potentially delay Disney’s complete acquisition of the streaming service. Triggering a clause in their 2019 agreement, the media giants are now in search of a neutral third-party advisor to mediate the Disney Hulu valuation dispute.

Key Points

JPMorgan Chase, representing Disney, appraised Hulu’s value at $27.5 billion, aligning with the floor valuation established in the initial agreement. Conversely, Morgan Stanley, advising Comcast, assessed Hulu’s worth at over $40 billion, reflecting a significant disparity between the two valuations. Disney has already integrated Hulu into its Disney+ platform, enhancing its content offerings, while Comcast argues that Hulu’s value has surged since the 2019 deal.:

An independent investment bank will be tasked with providing an impartial valuation of Hulu, with the final transaction value determined by averaging the two closest valuations (Disney’s bank & the third-party advisor), or resorting to the $27.5 billion floor valuation if consensus remains elusive. The ongoing Disney Hulu valuation dispute poses the risk of delaying Disney’s complete acquisition of Hulu, impacting the streaming platform’s future trajectory.

Hulu’s Significance and Deal Dynamics

Hulu, boasting popular originals such as “The Bear,” “Prey,” and “Only Murders in the Building,” closed December 2023 with 49.7 million subscribers, signaling steady growth. Comcast CEO Brian Roberts emphasizes Hulu’s status as a “scarce kingmaker asset,” underscoring its increased value since the 2019 agreement. Disney’s integration of Hulu into its Disney+ platform, featuring beloved titles like “Moana” and “Frozen,” further underscores the streaming service’s significance in Disney’s broader content strategy.

In November, Disney committed to acquiring Comcast’s remaining stake in Hulu for at least $8.6 billion, yet the Disney Hulu valuation dispute complicates the finalization of the deal. Despite differing assessments, both companies are collaborating to reconcile their discrepancies and reach a mutually acceptable agreement. As the third-party appraisal looms, the outcome will not only determine fair compensation for both parties but also shape the future trajectory of Disney’s streaming ambitions, underscoring the critical role Hulu plays in the increasingly competitive streaming landscape.

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