Disney and Comcast spar over Hulu's value

Now that Disney and Comcast have formally set in motion the sale process for Hulu, it will be a long and arduous road to determine how much the 16-year-old streaming service is worth.

Why it matters: Nailing down the final price of Hulu could add fireworks and a premium for Disney when all is said and done.

Catch up quick: Disney agreed to pay an initial $8.61 billion for Comcast's 33% stake. An appraisal process will determine whether Disney pays more.

The big picture: Ever since a 2019 "put/call" agreement between the two heavyweights, Disney and Comcast have been at odds over Hulu's true value.

• Hulu has been a tricky asset to value largely because it relies on licensing deals with other companies and thus doesn't own its own content. Comcast clearly believes Disney needs to dig deeper into its checkbook.
• "The company is way more valuable today than it was then," Comcast CEO Brian Roberts said in September.
• A source with knowledge of that 2019 agreement told Axios that the process used to determine the $27.5 billion is not the same process that the appraisal will follow.

By the numbers: Hulu is one of the few streaming services — the only major one outside of Netflix — that has ever turned a profit.

• Hulu has one of the highest monthly ARPU (average revenue per user/subscriber) of any streaming service — largely due to its high price point and live TV offering — doubling Disney+.
• On a straight revenue basis, Hulu earned $939.9 million per month in subscription fees last quarter, compared to $719.34 million per month for Disney+.

• Hulu also accounted for the bulk of Disney's $873 million streaming advertising revenue for the entire quarter.

What's next: Morgan Stanley and JPMorgan will decide on Hulu's value, and if the difference between the two valuations is more than 10%, a third bank will break the tie.

• While a few analysts have put some figures on what they think Hulu is worth — anywhere between $30 million to $60 million — most are wary of publicly saying anything because they want to be that tie-breaking appraiser, the source adds.

Editor's note: This story has been corrected to show that Morgan Stanley, not Goldman Sachs, is one of the banks selected to determine Hulu's value.