Walt Disney Co. (DIS) and Comcast (CMCSA) have each hired investment banks to value the Hulu streaming service that they jointly own.
Comcast, which owns one-third of Hulu, has hired Morgan Stanley (MS), and Disney, which owns the other two-thirds of the streaming platform, has hired JPMorgan Chase (JPM) to provide a fair value assessment for Hulu.
The value assessment is a condition of an agreement set up in 2019 that allows either Disney or Comcast to trigger an option forcing Disney to buy Comcast’s 33% stake in Hulu, effectively bringing ownership of the streaming service under one roof.
Five years ago, Disney acquired the majority of Hulu when it bought Fox’s entertainment assets in a $71 billion U.S. deal. However, Comcast didn’t want to sell its stake in Hulu to Disney right away because it believed the value of streaming video would increase.
This situation has resulted in an unusual arrangement where the two companies share ownership of Hulu, whose properties include popular television shows such as “The Bear” and “Only Murders In The Building.” Hulu currently has 48.3 million monthly subscribers.
Analysts have long criticized the current ownership structure of Hulu and pushed Disney to take total control and integrate Hulu into its long-term streaming strategy.
Disney and Comcast recently agreed to move up the deadline at which Hulu will be valued and Disney can buy out Comcast’s 33% minority stake.
Comcast CEO Brian Roberts recently said publicly that his company is moving to now sell its stake in Hulu to Disney. “We are excited to get this resolved,” he said.
Morgan Stanley and JPMorgan are scrutinizing Hulu’s value. If the two investment banks’ final valuations are within 10% of each other, the average of the two banks’ determinations will be the price at which Hulu is valued. Disney would then pay Comcast 33% of that value for its stake.
The terms of the 2019 deal struck between Disney and Comcast set a floor valuation for Hulu of $27.5 billion U.S.
Disney’s stock is down 13% over the last 12 months and trading at $84.35 U.S. per share. Comcast’s stock has gained 45% in the past year and is changing hands at $43.90 U.S. a share.
