Comcast, Disney ‘Tens of Billions’ Apart on Hulu Valuation, Now Aiming at Early 2024 Agreement (Report)

The Walt Disney Company and Comcast are “tens of billions of dollars apart” on the valuation of Hulu, one of a series of obstacles to reaching a deal for one of the companies to buy out the other’s ownership stake.

The Wall Street Journal reported that the two media and entertainment giants want to reach a deal to resolve the ownership of Hulu, but the disagreement over how much the nation’s fifth-largest streaming service is worth is stalling progress. Neither Disney nor Comcast responded to requests for comment.

Disney owns two-thirds of Hulu, while Comcast owns one-third, acquired when it took control of one of the streamer’s founding backers, NBCUniversal, in 2011. Two years later, Comcast bought the remaining portion of NBCU it didn’t own. Under their ownership agreement, starting next year, Comcast could force Disney to buy it out, or Disney can require Comcast to sell.

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Hulu considered selling itself outright 2014, The Journal noted, but ditched the idea in part because Comcast touted a plan to Disney and Fox, which owned a stake at the time, to make Hulu “the nationwide streaming video platform for the cable TV industry,” with the goal of taking market share from streaming leader Netflix. The envisioned cable streaming plan never happened, and Disney CEO Bob Iger was “furious,” the Journal said, citing a person familiar with the situation.

It’s just one of the disagreements that the two companies have had over the streamer, which now has 48 million subscribers. But should a deal be reached, any lingering disputes will likely be resolved as well.

Iger appeared to reverse his position on a buyout in recent months, going from saying “everything is on the table” with regards to the future of the streamer to telling analysts two weeks ago that “There seems to be real value in having general entertainment combined with Disney+.”

But while Iger said the companies had “cordial”and “constructive” talks, he acknowledged, “I can’t really say where they’ll end up.”

Hulu can be valued no lower than $27.5 billion under the companies’ agreement. As of Oct. 1, 2022, Disney valued Comcast’s stake at $8.7 billion, which would put the entire service below that target.

Comcast CEO Brian Roberts, meanwhile, told investors at a conference on May 16 that “it’s more likely than not,” that the company will sell its stake to Disney.

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Hulu’s value, he said, should be based on the hypothetical idea that it would be put up for sale in an auction for anyone —including any major media or tech company— to buy it. “The job is to then give us one-third of that value,” he said. “So I think we have a very valuable position.”

Each company will do an assessment of Hulu’s value again early next year, the Journal reported. If they remain wide apart, an independent third party will be brought in to make a determination, people familiar with the matter told the Journal.

Meanwhile, as the disagreements continue, Comcast has stopped funding Hulu, the Journal reported, citing people familiar with Hulu’s finances. The report said Disney provided the equivalent of a bridge loan to keep the streamer in cash.

“These two companies have a long-term, intricate dance of a relationship,” Bernard Gershon, a media consultant and former Disney executive, told the Journal. “and there are a ton of levers that can be pulled to get to a deal.”