Walt Disney said Wednesday that the company may have to pay up to an additional $5 billion to acquire Comcast’s minority stake in Hulu if appraisers agree that Comcast should value its minority stake in Hulu at more than $40 billion.
Disney and Comcast hired investment bank RBC Capital as an independent appraiser earlier this year to resolve a dispute over how to value their 33% stake in the streaming platform, according to people familiar with the matter.
Reuters first reported in May that Disney and Comcast were exploring hiring independent advisers.
The two parties are in arbitration proceedings to resolve the dispute, with a final decision expected to be made in fiscal 2025.
Disney and Comcast reached a deal for Hulu in 2019 after Disney acquired Fox assets, including a minority stake in Hulu, for $71 billion, with an option exercise date of January 2024.
The deal gave Disney majority control of Hulu, as it already held a 33% stake. Comcast held onto its stake at the time, believing its value would rise significantly by 2024.
Last November, Disney agreed to take a controlling stake in Hulu and pay Comcast at least $8.6 billion for its remaining 33% stake after Comcast struck a deal as part of a 2019 agreement.
Disney said Wednesday that if the independent advisers’ valuation is at or below the guaranteed minimum of $27.5 billion, it won’t have to pay Comcast more than the $8.6 billion it paid last year.
If RBC’s valuation matches Comcast’s, Disney would have to pay Comcast an additional $5 billion. If it falls between the two companies’ previous valuations, Disney would have to pay anywhere from $0 to about $5 billion.
JPMorgan, which is advising Disney on the deal, valued Hulu at just under $27.5 billion, the minimum valuation the two companies set in a 2019 “put-call” agreement.
Comcast’s adviser Morgan Stanley valued Hulu at $40.8 billion.
In regulatory filings last year, Disney and Comcast said the deal would be done at the average of the banks’ valuations if the difference between their valuations was within 10%.
The difference was more than 10 percentage points, so Comcast and Disney hired RBC for an independent valuation.
