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Disney and Comcast Hire Investment Banks for Hulu Valuation

Progress continues to be made on the potential sale of Comcast’s remaining Hulu stake to Disney. Both Comcast and Disney have hired investment banks to rate the value of Hulu ahead of November 1st when either company can trigger an option to kick off the sale of Hulu. Hulu already has a minimum value of $27.5 billion. However, Comcast CEO Brian Roberts believes that Hulu may be more valuable now.

Comcast still owns 1/3rd of Hulu. It hired Morgan Stanley to provide a fair value for Hulu. Disney has hired JP Morgan to do the same. This comes in accordance with an agreement made between the two companies five years ago about a potential sale to Disney of Hulu. The deal was made after Disney acquired Fox in 2019, and with it came another 1/3rd of Hulu which Fox owned at the time. Disney already owned 1/3rd of Hulu so the sale made Disney a majority partner with Comcast. The original deal had the sale trigger date in January of 2024. However, Disney and Comcast recently agreed to move it forward to November 1, 2023. On the 1st, either company will be able to trigger the sale of the remaining stake of Hulu. Comcast CEO Brian Roberts recently said that he expects the trigger to be pulled on November 1st.

“We are excited to get this resolved,” Roberts said at the Goldman Sachs’ Communacopia conference last month. “The company is way more valuable today than it was [in 2019]. And we are looking forward to seeing how that process [plays out].”

Once the trigger has been pulled, both JP Morgan and Morgan Stanley will begin the process of determining Hulu’s. If both banks final valuations come within 10% of each other, an average of the two determinations will determine the price of Hulu. Disney would then pay Comcast 1/3rd of that value to purchase the remaining stake. The lowest valuation, as set in 2019, is $27.5 billion. There is also the possibility that the banks’ assessments aren’t within 10% of each other. In this case, a third investment bank would be hired to make another valuation. This bank would be hired by Disney and Comcast together. The price would then be determined by an average between the new valuation and whatever previous valuation was closest to it.

The process of evaluating Hulu will not be simple. A streaming service like Hulu has never been sold outright before. Hulu does have 48.3 million subscribers. Roberts also made the case that a fair appraisal has to include synergy value as well. In this case, Disney owning Hulu also helps with Disney+ and ESPN+ subscriptions because of the ability to bundle them all together.

Both Roberts and Disney CEO Bob Iger have indicated that they want to see this process completed sooner rather than later. That is a big reason for moving the trigger date forward. There is no specific timeline on how long the valuation and then sale will take.

What do you think about the process of Hulu’s remaining stake being sold to Disney from Comcast? Is this a good move? Share your thoughts and opinions in the comments below!


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