By Comcast and Disney have recently advanced the deadline for determining the future ownership of Hulu, the popular streaming service currently owned two-thirds by Disney and one-third by Comcast.
Agreement Overview
As per the existing agreement, Comcast (ticker: CMCAS) has the option to revert its ownership stake in Hulu back to Disney (DIS), while Disney has the right to acquire the remaining portion of Hulu from Comcast. Originally slated to expire in January 2024, Comcast CEO Brian Roberts revealed at the Goldman Sachs Communacopia and Technology Conference in San Francisco that both parties have hastened the target date to address this matter to September 30.
Valuation Discrepancy
The original agreement between Comcast and Disney established a valuation floor of $27.5 billion for Hulu. However, Roberts has consistently argued that the actual value of the business surpasses this estimate.
Recognition of Hulu’s Success
During his address at the Goldman conference, Roberts spoke highly of Hulu as a “great business.” Furthermore, he highlighted that Hulu stands as the second-largest player in the subscription-based streaming services arena, citing Netflix’s valuation of approximately $200 billion.
In summary, Comcast and Disney have expedited their efforts to determine the future ownership of Hulu, given its considerable success as a leading streaming service.
The Valuation of Hulu
Robert, Chairman and CEO of Comcast, recently disclosed that the valuation of Hulu takes into account not only the streaming service itself but also the valuable content it provides, a significant portion of which is produced by Disney. According to him, if there were to be a genuine auction for Hulu, there would be numerous interested bidders.
To ensure fairness, both parties involved are required to hire third-party appraisers. If there is a substantial difference in their assessments, a third independent appraiser will be brought in to provide an impartial evaluation.
Although Robert did not provide an exact figure for the current value of Hulu, he emphasized that the business has become significantly more valuable over the years than when the initial floor value of $27.5 billion was set.
Furthermore, Robert announced that the proceeds from the sale of Comcast’s stake in Hulu will be utilized for share repurchases. He stated that the company plans to accelerate its buyback program by several billion dollars during the second half of calendar year 2023.
At present, Comcast shares have increased by 1.6% to reach $45.25, while Disney’s shares have experienced a slight decline of 0.5% and are currently priced at $80.75.
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