Disney to pay NBCU $438.7 million for Hulu stake

The Walt Disney Company (NYSE:DIS), a $208 billion entertainment giant currently trading near its 52-week high of $118.63, will pay $438.7 million to NBC Universal (NBCU) to acquire its 33% interest in streaming service Hulu. According to InvestingPro data, Disney maintains a moderate debt level while generating robust annual revenue of $94 billion. This transaction, expected to close by July 24, 2025, follows a contractual appraisal process concluded on Monday.

In November 2023, NBCU exercised its right under a put/call agreement to require Disney to purchase its Hulu stake at the greater of Hulu’s equity fair value or a guaranteed floor value of $27.5 billion. Disney initially paid NBCU about $8.6 billion in December 2023, reflecting the guaranteed floor value minus NBCU’s unpaid capital contributions.

The appraisal process involved valuations from Disney, NBCU, and a third appraiser. NBCU’s appraiser valued the stake above the floor value, while Disney’s valued it below. The third appraiser’s valuation determined the additional amount owed by Disney.

Disney stated that the additional payment to NBCU would be recorded in "Net income attributable to noncontrolling interests," reducing "Net income attributable to Disney" in the fiscal third-quarter financial statements. However, this payment is not expected to affect Disney’s previously provided fiscal 2025 Adjusted EPS guidance, as it will likely be excluded from the non-GAAP measure. InvestingPro analysis indicates the company’s strong financial health, with 13 analysts recently revising their earnings expectations upward for the upcoming period.

CEO Robert A. Iger commented on the resolution of the acquisition, highlighting the productive partnership with NBCU and the opportunity for a more integrated content offering across Disney’s streaming platforms.

This news is based on a press release statement from The Walt Disney Company’s recent SEC filing.

In other recent news, Walt Disney Co. has seen a positive adjustment in its stock outlook, as Rosenblatt analysts raised the price target to $140 from $135 while maintaining a Buy rating. This change reflects improved estimates across Disney’s various segments, including experiences, ad sales, ESPN streaming, and movies. The analysts expressed confidence in the company’s future, particularly if economic conditions remain stable. In another development, Disney’s ESPN has announced plans for a new direct-to-consumer streaming service set to launch in early fall. The service will offer two subscription plans, with options to bundle with Disney+ and Hulu, providing access to a wide range of sports content and programming. Meanwhile, NBCUniversal has submitted a bid to acquire Major League Baseball rights that ESPN recently vacated. This bid, reported to be less than ESPN’s previous $550 million-per-year contract, could see NBC broadcasting games on Sunday nights if successful. NBC is also interested in obtaining rights to the first round of the postseason and the annual Home Run Derby.

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