Comcast and Disney Start the Process to Complete the Hulu Sale





Disney and Comcast have spent the last few months going back and forth over Hulu. The two companies have finally kicked off the process to complete the sale of Comcast’s remaining stake in Hulu to Disney, giving the media giant full control of the streaming service.

CNBC’s David Faber reported that the two trigger their options to start evaluating Hulu’s value, which will ultimately decide the terms of the deal.

The deal has been a longtime coming and allows for the two giants to break from free from each other. Disney acquiring full control of Hulu will allow it to better integrate the service with its own Disney+ offering. Comcast can focus on its own streaming service in Peacock, with the funds from the deal allowing it to invest in other initiatives.

In an Securities and Exchange Commission filing from September, Disney disclosed that the companies will both hire outside investment banking firms to come up with a sale price if the the two companies couldn’t agree on a price. Those two firms’ valuation will be used to set the final sale price for Disney to buy Comcast’s share of Hulu. Comcast hired Morgan Stanley and Disney hired JPMorgan Chase to help decide the value of Hulu, according to CNBC.

If JPMorgan Chase and Morgan Stanley assessments are not within 10% of each other, the two firms will then select a third firm to come up its own figure. The ultimate sale price will come from the average of the two estimates that are closest in value to each other.

Here is the exact language from the filing:

The appraisers shall take into account factors they determine relevant to valuation and certain specific factors, including, among others, Hulu’s historical financial and operating results, which shall be based solely on audited financial statements; that Hulu is valued as a going concern, carrying on its existing business activities; and Hulu’s future business prospects and projected financial and operating results, assuming that the assets, contract rights and intellectual property used in Hulu’s business that are provided by Disney will be continued and available to Hulu in a manner and on terms consistent with past practice.

This comes as Disney and Comcast had agreed to speed up the process to get this point. They also amended their deal so either can force the other to accept a deal by November.

The companies set a valuation of $27.5 billion five years ago. But Comcast CEO Brian Roberts, who spoke in September at the Goldman Sachs Communacopia + Technology investor conference, said Hulu is “way more valuable” now compared to then. Comcast is hoping for as high a valuation as possible, even as Disney hopes it’ll be closer to the $27.5 billion mark.

The final details of Hulu’s sale are far from a done deal but there’s a clear path to figure out the valuation. The question now is will Comcast or Disney be happy with what the final price ends up being for Hulu, and when this deal actually gets done.

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