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How the Disney-Comcast-Hulu talks will work

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Illustration: Shoshana Gordon/Axios

Disney and Comcast will soon begin to negotiate the ownership fate of Hulu. Expect a bumpy ride.

Why it matters: The put/call deadline that's expected to see Disney acquire all of Hulu has been a $9 billion albatross sitting on Bob Iger's shoulder.

How it works: Last month, Comcast CEO Brian Roberts said the two companies moved up their deadline from January 2024 to begin talks starting Sept. 30.

  • In an SEC filing, the two companies detailed how this will work: Starting in November, either Disney can force Comcast to sell its 33% stake in Hulu or Comcast can force Disney to buy them out.
  • The value of Hulu will be assessed as of Sept. 30. When the put/call agreement was set back in 2019, the floor for Hulu's valuation was established at $27.5 billion. Roberts has repeatedly argued that Hulu is worth significantly more than that now.
  • The final price for Hulu will likely be figured out through arbitration.
  • If both sides can't agree on a value, then each will hire an investment bank to pour through Hulu's books and come up with their own valuations. If those two are not within 10% of each other, then a third investment bank will come in, and the final valuation will be an average of the two that are closest to each other.

The big picture: Disney is looking to cut costs. Iger has signaled interest in offloading Disney's linear TV networks like ABC and FX (while keeping ESPN).

  • In the meantime, Iger is boxed into figuring out Hulu, a deal made four years ago during streaming's boom times.
  • Even if Iger does not want to buy Comcast's stake — his endorsement of Hulu has been tepid, at best — Comcast has the contractual right to force the issue.
  • The two sides have been at odds over Hulu's value for a while now. Unlike most other streaming services, Hulu doesn't own the content on its platform, which makes its real value hard to gauge in any prospective sale talks.

What we're watching: How far apart the two sides are in that valuation exercise.

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