The Walt Disney Company’s buying of Comcast’s Hulu portion is in doubt, but a two-year contract could still work.
Disney bought Comcast/NBCUniversal’s 33% ownership in Hulu for $8.61 billion in 2023 to control the streaming service. Variety reports that Disney may have to increase wallet payouts.
Hulu’s fair market value is the issue between the two conglomerates. After 2019 discussions, the 33% ownership constituted a third of Hulu’s $27.5 billion guaranteed floor value. In Disney’s Q3 2024 10-Q filed with the SEC, the third-party appraiser “arrived at a valuation that falls below the guaranteed floor value, while NBCU’s appraiser arrived at a valuation substantially in excess of the guaranteed floor”; the two firms are disagreeing.
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Disney may have to pay extra due to appraisal value disparities, Variety reports:
The firms agreed that if the two sides’ valuations were not within 10% of each other, the banks they hired for the deal would choose a third firm to estimate and Hulu’s final worth would be the average of the two closest estimates.
Disney’s filing explains arbitration’s aftermath:
After arbitration, the final equity fair value will include a third appraiser’s valuation based on the arbitration’s appraisal procedure. So, if the third appraiser’s equity fair value is equal to or below the specified floor value, Disney won’t have to pay NBCU more. If NBCU’s appraisal were valid and the third appraiser’s equity fair value determination was consistent with it, Disney would have to pay NBCU $5 billion as its share of the difference between the equity fair value and the guaranteed floor value. The added price would be between $0 and $5 billion if the third appraiser’s equity fair value judgment was between Disney and NBCU’s.
READ MORE: Hulu + Live TV Loses Over 100,000 Subscribers n Q2 2024
Hulu had a busy week after Disney’s SEC filings. Hulu+Live dropped 100,000 subscribers, but Hulu on-demand added 900,000 over the quarter as consumers switched to on-demand entertainment. Despite losing and gaining users, Hulu is raising on-demand and live TV costs.
Hulu + Live TV users will experience a $6 hike from $76.99 to $82.99 on October 17, 2024, as will Hulu, Disney+, and ESPN+ subscribers.
The video below explains more.
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