Disney, as expected, is going all in for Hulu.
Disney's bold move to acquire the remaining 33% stake in Hulu from Comcast has sent waves through the media landscape, with the expected price tag set at a staggering $8.61 billion. This acquisition is part of a long-term strategy for Disney, aiming to consolidate its streaming services and expand its digital footprint in an increasingly competitive market.
Disney has been a major player in the streaming industry, with its ownership of Hulu, ESPN, and Disney+. The acquisition of Hulu’s remaining stake is a clear indication of Disney’s commitment to dominating the streaming world. The $8.61 billion price tag represents NBCUniversal’s share of the $27.5 billion "guaranteed floor value" for Hulu, established in the 2019 agreement between Disney and Comcast.
The appraisal process to determine the final price is set to conclude sometime in 2024, though the final price tag could be much higher than initially expected. Comcast CEO Brian Roberts has suggested that Hulu's value has increased significantly since the initial valuation, with engagement on the platform being "two to three times" that of other streaming services, excluding Netflix.
The agreement between Disney and Comcast has been public knowledge for some time, with both parties expressing their desire to conclude the deal as soon as possible. The timeline for the acquisition was recently accelerated, with the buyout expected to launch on September 30, instead of the previously agreed upon January 2024.
As part of the multi-appraiser process, Disney is set to pay Comcast the $8.61 billion by December 1, as they work together to conduct a fair market value analysis of Hulu. This analysis is expected to increase the final price of the acquisition.
Disney assumed full operational control of Hulu in 2019 through a put/call agreement with Comcast. This agreement allowed Comcast to force Disney to buy NBCUniversal’s interest in Hulu, or alternatively, Disney could require NBCUniversal to sell that interest to Disney for its fair market value. This put/call agreement was originally set for January 2024 but was moved up to September 2023. The agreement stipulated that Hulu's fair market value would be assessed by independent experts, but Disney guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at $27.5 billion.
In an August SEC filing, Disney revealed that the company and NBCU have been conducting a confidential arbitration concerning their rights and responsibilities under the Hulu limited liability company agreement. The outcome of this arbitration is uncertain, and it is unclear how it will impact the final price of the acquisition.
Hulu originally launched in 2008 as a partnership between Disney, NBC Universal, and 20th Century Fox, with Time Warner also acquiring a 10% stake at one point. Disney acquired Fox’s stake in Hulu as part of its acquisition of most of 20th Century Fox’s entertainment assets in 2019. Hulu’s offerings have expanded over the years, with various tiers of streaming services, live TV options, and bundle deals with Disney+ and ESPN.
As the streaming market continues to evolve, Disney’s acquisition of Hulu represents a major step in the company’s strategy to dominate the digital landscape. With a final price tag still to be determined, all eyes are on Disney and Comcast as they navigate this complex transaction and set the stage for the future of streaming.