Disney May Face Additional $5 Billion Cost for Comcast’s Hulu Stake, Reports Reuters

By Anirban Sen

Walt Disney announced on Wednesday that it may need to pay up to $5 billion more to acquire Comcast’s minority stake in Hulu, contingent on an appraiser’s agreement with Comcast’s valuation of the stake exceeding $40 billion. Earlier this year, Disney and Comcast engaged investment bank RBC Capital as an independent appraiser to settle a dispute regarding the valuation of the 33% stake in the streaming service.

The two companies have initiated arbitration proceedings to resolve this disagreement, with a final verdict anticipated in fiscal 2025. The agreement between Disney and Comcast regarding Hulu was established in 2019, including a strike date option set for January 2024, following Disney’s $71 billion acquisition of Fox’s assets, which included its minority share in Hulu.

This arrangement granted Disney majority control over Hulu, having already possessed a 33% stake. Comcast chose to maintain its stake, expecting its value to increase significantly by 2024. In November of last year, Disney consented to assume control of Hulu and agreed to pay Comcast a minimum of $8.6 billion for the remaining 33% stake, as Comcast enacted the deal as part of the 2019 agreement.

On Wednesday, Disney stated that if the independent appraiser’s valuation is at or below the predetermined floor value of $27.5 billion, it will not owe Comcast anything beyond the $8.6 billion already disbursed. Should RBC’s appraisal align with Comcast’s assessment, Disney would need to pay an extra $5 billion. If the appraisal falls between the two companies’ earlier evaluations, Disney’s payment could range from $0 to approximately $5 billion.

JPMorgan, serving as Disney’s adviser for this transaction, estimated Hulu’s value at less than $27.5 billion, which is the floor valuation established in their 2019 agreement. Conversely, Morgan Stanley, advising Comcast, assessed Hulu’s value at $40.8 billion. According to regulatory filings from last year, should the valuations from both banks fall within 10% of each other, a deal would occur at an average valuation of the two appraisals. As their assessments differed by more than 10%, Disney and Comcast chose RBC for an independent appraisal.