Disney “Very Comfortable With Current Liquidity Position” As Deadline Nears To Buy Rest Of Hulu

Disney interim chief financial officer Kevn Lansberry said the company is “very comfortable with our current liquidity position” as the time approaches for it to buy Comcast’s one-third stake in Hulu.

Comcast can “put” its stake to Disney, or Disney can call it in, in January. Disney CEO Bob Iger said back in May that “cordial” and “constructive” discussions had started with Comcast on that.

The floor for the “put” by Comcast is about $9.2 billion dollars, Lansberry noted on a conference call after Disney earnings in response to a question about the company’s ability to fund the transaction. Comcast CEO Brian Roberts has called the streaming service “very valuable” and said he hopes the stake will fetch more that that. That’s taking about a third of the $27.5 billion guaranteed floor value of all of Hulu that’s set out in the put/call agreement from 2019.

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Lansberry said Disney has “about $11.5 billion of cash on our balance sheet. We’ve got $10.5 billion worth of revolving credit facilities and commercial paper. And we will have plenty of future cash flow to help fund all of this going forward.”

Despite recent headwinds, Disney still has one of the strongest balance sheets among media companies.

“We made significant progress recently de-levering coming out of the pandemic. We are prioritizing free cash flow at the company and are being really disciplined and smart about how we go about allocating capital,” said the interim CEO, who stepped in when Christine McCarthly exited in June.

Disney reported $1.6 billion in free cash flow last quarter.

In its quarterly SEC filing, which can have a bit more detail that the earnings release, Disney said: “The Company and NBCU have been conducting a confidential arbitration concerning the parties’ rights and responsibilities under the Hulu limited liability company agreement. The Company expects a decision in that arbitration within the next quarter. The outcome of the arbitration is uncertain and we cannot reasonably estimate the amount of any potential loss or the impact on the determination of the value of Hulu’s equity pursuant to the Hulu limited liability company agreement and thus the amount we may be required to pay to acquire NBCU’s interest in Hulu.”

He said Disney is still planning to recommend its board approve a modest dividend at the end of the year for the first time since the payout was cut in May of 2020 to conserve cash during Covid.

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