It has finally happened The Walt Disney Company has agreed to purchase the remaining 33% stake of Hulu from Comcast. “The acquisition of Comcast’s stake in Hulu at fair market value will further Disney’s streaming objectives,” a rep for Disney said on Wednesday.
Over the past year, there has been extensive discussion within the financial community regarding the future of Hulu, given its unique ownership structure and the presence of put and call options. Beginning in November, Comcast acquired a put option that granted them the ability to require Disney to assume control of its stake in Hulu, while Disney had the reciprocal right to compel Comcast to divest its stake. A pre-existing agreement mandated an impartial evaluation of Hulu’s fair market value by independent experts. Nevertheless, a predetermined minimum valuation of $27.5 billion assured that Disney would need to commit a minimum of $9 billion. In a recent filing, Disney disclosed its anticipation of a payment amounting to $8.61 billion, subject to further appraisal proceedings to establish the final sum.
“While the timing of the appraisal process is uncertain, we anticipate it should be completed during the 2024 calendar year,” Disney said.
Disney’s CEO, Bob Iger, has expressed a desire to refocus the company on its renowned content brands, encompassing Pixar, Marvel, Lucasfilm, and family-oriented content. When asked about the implications for Hulu during a February 2023 CNBC interview, he remained noncommittal, stating, “Everything is on the table right now, so I am not going to speculate whether we are a buyer or a seller of it. But I obviously have suggested that I’m concerned about undifferentiated general entertainment [content], particularly in the competitive landscape that we are operating in.”
Analysts Craig Moffett and Michael Nathanson of MoffettNathanson attempted to decipher this statement and remarked in a report at the time, “Disney CEO Bob Iger was notably noncommittal about Disney buying. And he was notably evasive about Disney selling. Comcast has been characteristically silent. Let the speculation begin.” However, subsequently, many analysts, including Moffett and Nathanson, have come to view Comcast as the most likely candidate to sell its stake in Hulu.
Brian Roberts, Comcast’s CEO, alluded during the annual Goldman Sachs’ Communacopia + Technology Conference in the recent past that the activation of the option to sell was highly probable.
In a July forecast, Moffett and Nathanson projected that Hulu would gain approximately 2.0 million subscribers annually, ultimately reaching 55.2 million subscribers by 2026. This figure would comprise 49.7 million streaming video on demand (SVOD) users and the remainder as Live TV+SVOD customers, with anticipated revenues of $14.1 billion for fiscal year 2026.