Disney Sure Got a Rude Awakening on Hulu’s Value

Good news, Disney: Hulu, which you now own outright , may very well be worth more than you thought! Bad news: You’re going to have to pay up for it.

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In November 2023, NBCUniversal exercised an option that forced Disney to buy out its 33 percent share in the general-entertainment streaming service Hulu , which was originally formed as a joint venture between Fox, NBC, and ABC. CBS, with CBS All Access (which would turn into Paramount+), wanted no part of the party. So the three participating broadcast networks were equal partners — until Disney bought most of Fox’s assets in a blockbuster $71 billion deal that closed in 2019. (The acquisition was announced in 2017.)

Suddenly, Disney had a controlling interest in Hulu, which means NBCU had no real say in how it ran their joint business. For a short while, NBC played ball. After launching Peacock, however, NBC saw no need for a minority stake in another streamer. It also saw dollars signs — lots of them.

When Disney acquired Fox’s stake, the remaining parties had to agree upon a valuation for Hulu. They came up with a floor of $27.5 billion, and a five-year plan for NBC to be in or out of the Hulu business . When NBCU chose “out,” it was easy to determine how much Disney should have to pay — at a minimum — for its stake.

Comcast, the parent company of NBCUniversal, cashed an $8.6 billion check in December 2023 from Disney with the memo line “Hulu, thanks!” (probably). Comcast boss Brian Roberts argued a t t h e t i m e t h a t it was way too low for Hulu’s present-day valuation; Disney countered that it was too high. In May, with the companies’ respective bankers split along the same lines (shocker, we know), arbitration began. We’ll get the results in fiscal-year 2025, Disney wrote in a Wednesday filing with the SEC.

The filing hinted that Comcast’s appraiser thinks NBCU is owed a second check, this one for $5 billion more. The memo line on that one probably wouldn’t be so polite.

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The document also stated that Disney must pay NBCU 50 percent of the future tax benefits from the amortization of the purchase for probably the next 15 years. But that’s not the high drama here; here is the high drama:

“If the third appraiser’s equity fair value determination were equal to or below the guaranteed floor value, [Disney] would not be required to pay NBCU any additional amount,” the Form 10-Q reads, in part. “Conversely, if NBCU’s appraisal were deemed to be valid and the third appraiser’s equity fair value determination were consistent with the NBCU’s appraiser’s valuation, [Disney] would be required to pay NBCU an additional amount of approximately $5 billion as its share of the difference between the equity fair value and the guaranteed floor value. If the third appraiser’s equity fair value determination were between the valuations of [Disney] and NBCU’s appraisers, the incremental amount would likewise be between zero and approximately $5 billion.”

A spokesperson for Comcast did not immediately provide comment for this story.

Disney reported the results of its fiscal third quarter (the second quarter by the calendar) on Wednesday. The company turned a surprise profit from streaming — one quarter ahead of schedule — but did not add many subscribers.