Disney will assume full operational control of streaming platform Hulu, effective immediately, following an agreement with Comcast.
Disney and Comcast have entered into a “put/call” agreement regarding NBCUniversal’s 33% ownership interest in Hulu, whereby Comcast can require Disney to buy NBCUniversal’s interest in Hulu as early as January 2024, and Disney can require NBCUniversal to sell that interest to Disney for fair market value at that time.
Hulu’s fair market value will be assessed by independent experts, however Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5bn.
Disney and Comcast have agreed to fund Hulu’s recent purchase of AT&T Inc.’s 9.5% interest in Hulu, pro-rated to their current two thirds-one third ownership interests.
Going forward, Comcast will have the option to fund its proportionate share of Hulu’s future capital calls and will be diluted if it elects not to do so.
Disney has agreed that only $1.5bn 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. Whether Comcast funds its share of those equity capital calls or not, Disney has agreed that Comcast’s ownership interest in Hulu will never be less than 21% such that Comcast is guaranteed to receive at least $5.8bn under the “put/call” agreement.
Comcast has additionally agreed with Hulu to extend the Hulu license of NBCUniversal content and the Hulu Live carriage agreement for NBCUniversal channels until late 2024, and to distribute Hulu on its Xfinity X1 platform.
NBCUniversal can terminate most of its content license agreements with Hulu in three years’ time, and in one year’s time NBCUniversal will have the right to exhibit on its own OTT service certain content that it currently licenses exclusively to Hulu, in return for reducing the license fee payable by Hulu.
Disney chief 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.”