The battle over Hulu's value appears far from over, with both Disney (DIS) and Comcast's NBCUniversal (CMCSA) at odds over just how much the streaming platform is worth.
In an SEC filing tied to Disney's third quarter earnings on Wednesday, the company warned it might have to pay an additional $5 billion for Hulu, news that further pressured shares in early trade after the entertainment giant reported disappointing results in its parks business.
Last year, Disney announced it would pay Comcast $8.61 billion for its stake in Hulu, which matched the minimum guaranteed value of Hulu — $27.5 billion — that Disney would be required to pay in order to buy Comcast out of the 33% stake it held in the streaming service.
This news kicked off negotiations over the value of Hulu, which could put Disney on the hook for billions more.
According to Wednesday's filing, Disney's third-party appraiser unsurprisingly said Hulu's valuation is below the $27.5 billion guaranteed floor value. Meanwhile, NBCU's appraiser "arrived at a valuation substantially in excess of the guaranteed floor value," according to the filing.
Per a confidential arbitration agreement the two companies struck in May, a third appraiser has now been called in to determine Hulu's true market value.
Three outcomes remain as a result:
If the third appraiser's fair value determination is equal to or below the guaranteed floor value, Disney does not pay Comcast any additional money.
If the third appraiser's fair value determination is consistent with NBCU's valuation, Disney would be required to pay NBCU an additional amount "of approximately $5 billion" to cover the difference.
If the third appraiser’s fair value determination comes in between Disney's and NBCU's, "the incremental amount would likewise be between zero and approximately $5 billion."
Disney said it expects a final decision during its fiscal 2025, which begins in October.
Still, the company noted in the filing that the outcome "is uncertain and we cannot reasonably estimate the impact of the arbitration on the appraisal process and thus any impact on the determination of Hulu’s equity fair value and any additional amount we may be required to pay to acquire NBCU’s interest in Hulu."
Wednesday's development highlights the complicated back-and-forth process that has hung over both companies and Hulu over the past few years.
Comcast reportedly weighed purchasing Disney's majority stake at one point but changed course due to content rights concerns, as a significant portion of Hulu's content is owned by Disney.
Even Disney CEO Bob Iger had flip-flopped on the purchase before ultimately deciding that Hulu offered Disney the opportunity for an alternative, more mature viewing experience for consumers, in addition to providing more flexibility with bundling.
Hulu boasted just over 51 million total subscribers as of July and hosts top-rated shows, including "Only Murders in the Building," "The Handmaid's Tale," and "The Dropout."
Hulu has also been a contributor to Disney's streaming profitability success, with the company turning a profit in that unit for the first time, the company's latest earnings report showed.
Disney's direct-to-consumer (DTC) streaming business, which includes Disney+, Hulu, and ESPN+, posted operating income of $47 million in its fiscal third quarter, compared to a loss of $512 million in the prior-year period. The company had previously expected to achieve total streaming profitability by the current quarter.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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