Michael Kovac
Walt Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA) have tapped investment banks to put a value on Hulu — the streaming site they co-own — ahead of a sales process likely to put the platform under sole ownership.
That process is the result of an arrangement made years ago when Disney (DIS) took majority ownership of Hulu by buying the media assets of Fox in a $71B deal. That provision allows for the companies to trigger an option for Disney to acquire Comcast’s remaining one-third ownership.
As the companies grasp at a fair value for Hulu, Comcast (CMCSA) has hired Morgan Stanley (NYSE:MS), and Disney (DIS) has named JPMorgan Chase (NYSE:JPM).
At stake is just what Disney (DIS) would pay for sole control of Hulu. The 2019 agreement set a minimum valuation of $27.5B, and Comcast has sat tight on its stake expecting it to have grown in the intervening years, even as it lacked operational control at the streamer.
Hulu had been owned by four companies: Disney, Comcast, Fox, and Time Warner. Today’s two-thirds/one-third ownership was set up by Time Warner selling its 10% back to the other partners and Disney’s acquisition of Fox’s stake.
Nov. 1 brings Comcast the right to force Disney to acquire its stake, and/or for Disney to trigger an option to acquire the stake from Comcast — and that is the expected result.
If the two investment banks’ final valuations are within 10% of each other, Hulu’s valuation will be the average of the two estimates, CNBC noted — and Disney would then pay Comcast a third of that valuation to take 100% control.
At the floor valuation, that means Disney (DIS) transferring at least $9.17B to Comcast (CMCSA), and Comcast has said it plans to return proceeds to its shareholders.