The Walt Disney Company faces paying billions of dollars more for its acquisition of Hulu, due to a valuation disagreement with Comcast. In 2019, Disney agreed to buy out Comcast’s stake in the streaming service Hulu for $27 billion. However, Comcast argues Hulu is now worth much more, around $40 billion.
This disagreement has gone to arbitration. In a recent SEC filing, Disney revealed it could have to pay up to $5 billion extra if arbitrators side with Comcast. Comcast owned 33% of Hulu before selling to Disney for $8.6 billion in late 2023. But Comcast says Hulu significantly increased in value since 2019. If required to pay the additional $5 billion, Disney said this would be “its share of the difference” between the original $27 billion valuation and Comcast’s $40 billion appraisal.
The potential extra costs for Hulu come at a difficult time for Disney. The company recently raised prices for streaming subscriptions, which analysts now see as possibly related to the expected higher Hulu costs. While Disney+ became profitable earlier than projected, subscriber growth has slowed, suggesting it may be nearing market saturation. Disney hopes bundling Disney+, Hulu and ESPN+ will help continue growth. But the additional Hulu bill could strain finances and impact content spending or pricing strategies going forward.
The outcome of this arbitration case over the next year will bring Disney much uncertainty. It serves as a warning for other companies in the quickly changing streaming industry, where purchase prices can differ wildly from initial valuations. As Disney navigates this challenge, the resolution of the Hulu disagreement will be closely watched throughout the media world.
