Disney is fighting tooth and nail to avoid having to pay Comcast even more to gain full control of Hulu, but the issue is now in the hands of arbitrators and independent evaluators. Regardless of the outcome, Disney has no one to blame but themselves for their situation, which comes just as the corporation is facing financial struggles in a down economy.
Disney’s Buying Spree Backfires
First launched in 2007, Hulu was originally formed to provide streaming content from multiple media companies. In 2009, Disney, Fox, and Comcast (via NBCUniversal) entered into a partnership wherein all three companies owned an equal stake in Hulu, and provided their content on one platform. When that arrangement changed whenDisney bought Fox’s film assets in 2019,Comcast was given an escape clause, allowing themselves to be bought out within five years if they chose to end the Hulu partnership.
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In December of 2023, Disney cut a check to Comcast for $8.6 billion for their 33% stake in Hulu, but the company balked at the amount. They insisted the $27 billion valuation of Hulu was several years old, and the company was now worth closer to $40 billion.Comcast had a strong argument: with Disney’s acquisition of Fox, the addition of new content made Hulu a much more valuable platform. Disney argued that Hulu was actually worth less than the original value, but was contractually obligated to the original valuation. With the two companies at an impasse over the value, arbitrators stepped in, which was bad news for Disney.
In a quarterly filing with the SEC,Disney revealed that once arbitrators rule, it could have to pay up to $5 billion more if it is determined Hulu is worth more.It could take another year for a determination to be made, and the filing hinted that Disney may need to pay more to Comcast after all:
“If NBCU’s appraisal were deemed to be valid…(Disney) would be required to pay NBCU an additional amount of approximately $5 billion as its share of the difference.”
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Even if Disney ends up owning additional billions,it will still fall short of the loss Elon Musk took when he acquired Twitter in 2022 for $44 billion.At the time, Musk was Twitter’s largest shareholder, and proposed a buyout move that the company’s board opposed. The resulting conflict caused Twitter’s stock value to tumble, and Musk nearly backed out of the deal, only to move forward after threats of lawsuits emerged. The deal was finalized later that year, andMusk instituted cuts in staffthat have made Twitter (now called X) more profitable, butMusk valued the company upon purchase at about $20 billion, less than half of what he paid.
