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Disney (NYSE:DIS) and Comcast (NASDAQ:CMCSA) are in talks to hire a third financial adviser to evaluate the worth of Hulu, the streaming service they both own, Reuters reported -- an anticipated step if the two companies' own valuation estimates were too far apart.
Disney (DIS) has been set to take 100% ownership of Hulu, which was previously run as a joint venture by up to four companies (Disney, Comcast, Fox and Time Warner) -- and, after Warner Bros. Discovery (WBD) sold out of its stake, and Disney acquired Fox's media assets, that left Disney and Comcast with two-thirds/one-third ownership respectively.
Comcast and Disney came to an unusual put-call deal in 2019 to resolve the JV by 2024, with a "floor valuation" for Hulu set at $27.5B. Later in 2023, with speculation swirling about whether Comcast would make a play for its own full ownership, the two companies agreed that Disney would take over and buy out Comcast, at a mutually agreed Hulu valuation (and Disney agreed to pay at least $8.6B for the one-third stake).
The two companies agreed to offer their own estimates of Hulu's worth, and that they would hire a third adviser to settle the matter if their takes were more than 10% apart -- and that's apparently come to pass.
Disney (DIS) and its representative J.P. Morgan have valued Hulu near the floor value of $27.5B, according to Reuters, while Comcast (CMCSA) and its rep Morgan Stanley see the valuation at more than $40B.
That means a third investment bank by mutual hire will independently value the streamer, and the two companies are in talks about that, according to the report.
The resulting valuation will be the average of the third bank's estimate and whichever company's estimate that third estimate is closest to -- provided that's at least $27.5B.
Just after midday Monday, Disney stock (DIS) was 1.9% higher, while Comcast (CMCSA) was 0.4% lower on the day.