How much is Hulu worth, exactly?
That is the key sticking point between Comcast, led by Brian Roberts, and The Walt Disney Co., led by Bob Iger, as the two companies inch closer to a window where one side or the other can force Disney to buy out Comcast’s 33 percent stake in the streaming service.
We know there’s a floor value of $27.5 billion (which would see Disney handing over $9 billion to Comcast for the stake), but executives at Comcast think that’s conservative.
“That was just a hypothetical we picked out five years ago. The company is way more valuable today than it was then,” Roberts said at a Goldman Sachs conference this week, adding that Hulu was “a scarce kingmaker asset.”
On Sept. 6, Comcast and Disney amended their previous deal, which would have activated the put/call options in Jan. 2024. The new agreement moves the options up to Nov. 2023, with the value of Hulu assessed as of Sept. 30.
An SEC filing from Disney on Friday afternoon outlines exactly how the companies plan to value Hulu. It’s a touchy subject, with Disney almost certainly hoping for a value as close to the $27.5 billion floor as possible (if not below it), and Comcast hoping for a number as high as possible.
According to the filing, if Disney and Comcast can’t reach a mutual agreement on the value, each company will hire an investment bank to examine Hulu’s books and come up with a valuation.
“If the two determinations are not within ten percent (10%) of each other, then the two investment banking firms select a third firm to make a third determination, in which case the equity fair value shall be the average of the two determinations that are closest in value to each other,” the filing continues.
Those investment bank appraisers will base their valuations on “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.”
In other words, it will be numbers-based, with a bit of guesswork based on future projections and IP potential.
But for Disney and Comcast, there are billions of reasons to pay close attention.
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