Disney to Pay $100 Billion for Hulu?!?!
Of course, that title is clickbait but it’s not entirely inaccurate.
All of the studios have been so badly burned by the streaming wars that it was just announced that Disney+ and Warner Brothers’ Max would be bundled together on Hulu. I have a feeling Zaslav is getting the better end of that deal. He won’t be paying for Hulu for a start.
Quick reminder, Disney was originally an equal partner with Fox and Universal for Hulu. When they bought up Fox they got the majority interest in Hulu and a legal headache with Universal. This was settled with a Put option to be exercised in 2024 when Disney would buy Universal’s remaining stake in Hulu. The plan, apparently, was to pay for it all with the mega billions that Disney + was going to bring in.
Yeah, not so much.
Disney is going to have to pay a lot more for Hulu than they ever wanted to. A third party had been brought in to try to resolve the differences in valuation. Universal and Disney both brought in separate banks to evaluate the worth of Hulu. JPMorgan did their assessment for Disney and came in with a bargain basement price of $27.5 billion. Although it’s possible that JPMorgan was factoring in what Disney’s corporate leadership is likely to do to Hulu long term, in which case $27.7 billion is probably too generous.
Morgan Stanley was brought in by Universal and was therefore given to bright and cheerful optimism with a price tag of $40 billion for Hulu.
Obviously, the final price is going to land somewhere in the middle. And that means that Bob Iger is going to be paying four to six billion dollars more for Hulu than he was hoping he would.
Buying Fox was at best a fairly questionable idea. However, the original asking price of about $40 billion was not insane. Then Brian Roberts the CEO of Comcast NBC/Universal decided to use Bob Iger’s ego to cripple Disney and topped their bid. Iger responded by offering what he called in his biography, a knockout punch of $71 billion. An amount that had to have left Roberts rolling on the floor gasping with laughter.
Now, I’ve heard the excuse that Bob Iger had to buy Fox to get all of Marvel’s A-list superheroes back like X-Men, Fantastic Four, Deadpool, the Punisher, Namor, and Dare Devil. First of all, in no universe were those properties worth $71 billion. Second, if Comcast had bought Fox, the self-destruct clauses that Ike Perlmutter had written into those contracts thirty years ago would automatically be triggered and Disney would have recovered those rights for the fire sale price of $0.00. They were (and in the case of Sony still is) non-transferable. Iger would have been better off if Comcast had bought Fox.
After shutting down most of the productions at Fox, pretty much the only thing left worth having was Hulu. So now the final purchase of Fox and Hulu will be around $100 billion.
