Disney May Pay More for Hulu Stake

Walt Disney announced on Wednesday that it may be required to pay up to an additional $5 billion to acquire Comcast’s minority stake in Hulu, contingent upon an independent appraisal agreeing with Comcast's valuation of the streaming service at over $40 billion. The two companies have engaged RBC Capital as an independent appraiser to resolve their ongoing dispute regarding the worth of Comcast's 33% stake in Hulu, with arbitration proceedings currently underway and a final decision anticipated in fiscal 2025. The valuation dispute stems from a 2019 agreement between Disney and Comcast, which followed Disney's $71 billion acquisition of Fox's assets, including its stake in Hulu. Under this agreement, Disney gained majority control of Hulu, while Comcast retained its stake, anticipating a significant increase in value by 2024. In November 2022, Disney committed to acquiring the remaining 33% stake from Comcast for at least $8.6 billion, following Comcast's activation of the deal. Disney clarified that if the independent appraisal falls at or below the guaranteed floor value of $27.5 billion, it would not owe Comcast any additional payments beyond the $8.6 billion already agreed upon. Conversely, if the valuation aligns with Comcast's assessment, Disney would face a $5 billion increase in costs. The valuations provided by Disney's adviser, JPMorgan, and Comcast's adviser, Morgan Stanley, differ significantly, prompting the need for an independent appraisal to settle the matter.