Walt Disney (NYSE:DIS) has officially initiated the process of purchasing Comcast’s one-third stake in Hulu, marking a significant development that will grant Disney full ownership of the popular streaming service and allow for its integration into Disney’s own streaming platform, Disney+.
The agreement for Comcast to sell its stake to Disney was originally reached in 2019, and under the terms of that agreement, either NBCUniversal (NBCU) or Disney could commence the transaction as early as November 1. This timeline was expedited from the initial date set for January 2024.
Disney, based in Burbank, California, had obtained a controlling interest in Hulu as part of its $71 billion acquisition of 21st Century Fox’s film and television assets, providing Disney with a significant advantage in the competitive landscape of streaming services.
As per the arrangement, Disney expects to make a payment of approximately $8.61 billion to NBCU by December 1. This sum represents NBCU’s share of the $27.5 billion guaranteed floor value for Hulu established in 2019, minus the expected outstanding capital call contributions payable by NBCU to Disney.
The equity fair value of Hulu will be assessed as of September 30, 2023, following agreed-upon terms. If the determined value exceeds the guaranteed floor value, Disney will be responsible for paying NBCU the difference. The assessment of Hulu’s fair market value will be conducted by bankers representing both parties, as specified in regulatory filings. While the precise timing of the appraisal process remains uncertain, Disney anticipates its completion in 2024.
Comcast CEO Brian Roberts described Hulu as a “scarce kingmaker asset” during a Goldman Sachs conference this fall, emphasizing that its value has grown considerably since the initial deal was made.
At the close of Disney’s third quarter, Hulu had 48.3 million subscribers, while Comcast’s Peacock streaming service had 28 million paid subscribers at the end of Comcast’s third quarter. In the same period, Disney+ boasted 146.1 million global subscribers, further solidifying Disney’s position in the streaming market.
Featured Image: Megapixl
