Disney takes full control of Hulu

Disney is to assume full operational control of US streaming service Hulu. 

The Walt Disney Company and Comcast have entered a “put/call” agreement on NBC Universal’s 33% ownership stake in Hulu with Disney guaranteeing the streaming service future valuation at $27.5 billion.

Under the agreement which could be activated as early as January 2024, Comcast can require Disney to buy NBC Universal’s interest in Hulu and Disney can enforce NBC Universal to sell that interest to Disney for its market value at that future time.

A fair assessment by an independent expert would be called on to value Hulu at the time, however, Disney has guaranteed the sale price to Comcast to represent a minimum total equity value of $27.5 billion.

A Disney representative formally announced the news today as a press conference in New York.

In a statement, both Comcast and Disney have confirmed to fund Hulu’s recent purchase of AT&T 9.5% interest in Hulu, pro rata to their current two thirds and one third ownership interests.

Last month, AT&T confirmed the sake of its 9.5% stake in Hulu which was valued at $15 billion.

• Read more AT&T to sell Hulu stake

Going forward, Comcast will have the option but not the obligation to fund its proportionate share of Hulu’s future capital calls and will be diluted if it elects not to fund.

Disney has agreed that only $1.5 billion of any year’s capital calls can be funded through further equity investments with any capital in excess of that annual amount being funded by non-diluting debt.

Disney has agreed that Comcast’s ownership interest in Hulu will never be less than 21% and that Comcast is guaranteed to receive at least $5.8 billion under the put/call agreement.

In addition to the agreement, Comcast has confirmed Hulu will extend the Hulu license of NBC Universal content and the Hulu Live carriage agreement for NBC Universal channels until the end of 2024 and will continue to distribute on its Xfinity X1 platform.

NBC Universal is permitted to terminate most of its content license agreement with Hulu in three years’ time and in 12 month’s NBC Universal will have the right to share certain content currently licensed to Hulu on its own OTT service, in an exchange for reducing its license fee payable by Hulu.

According to Deadline, the deal had been “widely expected” based on Disney’s strategic push into the streaming industry along with its upcoming Disney+ service and ESPN+.

It concluded that Comcast’s decision to sell “has no doubt been influenced” by the company’s debt load which grew at the end of 2018 after it acquired Sky for $40 billion.

Disney chief executive Bob Iger said: “Hulu represents the best of television, with its incredible array of award-winning original content, rich library of popular series and movies, and live TV offerings.

“We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers.”

Disney completed its acquisition of Fox in March for $71.3 billion which included Fox’s stake in Hulu along with Fox’s studio and network assets.

• Read more Disney completes $71.3bn Fox acquisition