A battle between two media giants over the valuation of a leading streaming platform is almost at its end with a deal announced by Walt Disney Co. (NYSE:DIS) to acquire the stake in Hulu it did not already own.
Disney shares struggled in 2023, but the company may have a catalyst or an item that needed more clarity before finally putting it to rest.
On Wednesday, Disney announced it will acquire the 33% stake in Hulu it did not own from NBC Universal, a unit of Comcast Corporation (NASDAQ:CMCSA).
“The acquisition of Comcast’s stake in Hulu at fair market value will further Disney’s streaming objectives,” said Disney in the press release acquiring the last stake from Comcast..
Hulu initial started in 2007 that had “initial distribution partners” that included NBC Universal, AOL, MySpace, MSN, and Yahoo!.
NBC Universal at the time was previously owned by General Electic and Vivendi before it was sold off to Comcast.
The deal came after Comcast exercised its rights under a put/call arrangement on Nov. 1 that was previously agreed upon. Disney will acquire the stake at fair market value.
According to Disney, the company expects it will pay $8.61 billion to Comcast for the stake based on a floor value of $27.5 billion minus the outstanding capital contributions that NBCU will pay to Disney.
A fair value based on the date of Sept. 30, 2023, will be assessed. If the amount is higher than the guaranteed floor value above, Disney will pay NBCU its percentage of the difference.
Disney anticipated the deal will be completed in the 2024 calendar year.
“We’re in a very interesting transition period, but one I think is inevitably heading towards streaming,” said company CEO Bob Iger.
Iger held the view that Disney would move content to a streaming service.
Based on the comments from Disney, the company likely believed Hulu would be valued at $27.5 billion or less.
With the deal, Disney would have full ownership of Hulu, a move that could boost its streaming plans. The company owns the Disney+ platform and ESPN+ platform.
Disney ended the third quarter with 105.7 million Disney+ core subscribers. Hulu ended the third quarter with 44 million SVOD subscribers and 4.3 million Hulu Live TV subscribers.
Disney has emphasized growing its direct-to-consumer business, while also exploring potential asset sales of non-core businesses. With the Hulu purchase, streaming is likely to remain a key focus of the company moving forward.
It was reported that Disney held talks with Nexstar about the possibility of selling the ABC Network. Nexstar bought The CW last year.
Produced in association with Benzinga
