Hulu had long been jointly owned by multiple media giants, but various mergers and acquisitions resulted in that list being whittled down to two: Disney and Comcast. Now a deal is in place that will see Disney assume full control over Hulu, with Comcast likely selling its stake to Disney in five years for billions.
The move was announced in a joint release today:
The Walt Disney Company (NYSE: DIS) and Comcast Corporation (NASDAQ: CMCSA) announced today that Disney will assume full operational control of Hulu, effective immediately, in return for Disney and Comcast entering into a “put/call” agreement regarding NBCUniversal’s 33% ownership interest in Hulu.
Under the put/call agreement, as early as January 2024, Comcast can require Disney to buy NBCUniversal’s interest in Hulu and Disney can require NBCUniversal to sell that interest to Disney for its fair market value at that future time. Hulu’s fair market value will be assessed by independent experts but Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5 billion.
Under the terms of the deal, Comcast essentially has the right to force Disney to buy out their stake in 2024 for no less than $5.8 billion, based on that minimum equity value for the whole company of $27.5 billion. Should Comcast not want to sell, Disney could force them out as well for the same price. A mutual option, essentially, and one that is almost guaranteed to be exercised in one form or another.
Disney, meanwhile, gets to keep Comcast-owned content from NBC Universal on the service exclusively for a time, and then for a lowered cost once the exclusivity window ends:
In addition to the put/call agreement, Comcast has 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.
According to reports, Comcast can end the licensing agreements in the deal as early as 2022.
Hulu offers an array of services now, from its own original content available to subscribers to recent episodes of network television to an over-the-top television service for $45 a month, with a branding effort heavily focused on their live sports offerings. The fact that it’s now essentially another Disney property means that, when Disney+ launches in November, Disney will have three distinct subscription streaming services between Hulu, Disney+, and ESPN+. It means a bundled package could be even more likely.
It also means we’re one step closer to Disney having a piece of everything you’re watching, in one way or another. That’s apparently how they’d prefer it.