Tuesday, 26 May, 2020

Disney Is Immediately Taking Control Of Hulu in Comcast Deal

Hulu logo Disney Is Immediately Taking Control Of Hulu in Comcast Deal
Adrian Cunningham | 14 May, 2019, 19:13

Now, The Walt Disney Company and Comcast Corporation have announced 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 their pact, Comcast's NBCUniversal will retain its 33% ownership interest in Hulu but as early as January 2024, Comcast can require Disney to buy NBCU's interest in Hulu.

By establishing an expiration date of five years from now, Comcast is betting the value of its stake will appreciate significantly as Disney prepares unencumbered to expand the scope and reach of Hulu in the domestic and worldwide markets to battle the likes of Netflix, Amazon.com Inc and Apple Inc. "Postponing the closing five years (later) allows Disney to not take on more debt after just closing (its purchase of) Fox, while giving Comcast an option to the upside if/when the Hulu valuation grows during this time". Many specifics are still unknown, but we're already seeing certain pieces fall into place. 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 $5.8 billion under the put/call agreement.

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So what does this mean for NBCUniversal's library of TV shows and movies on the service? But once the entire stake is owned by Disney, that will give the House of Mouse an overall 93% controlling stake in the streaming service. The stuff that isn't appropriate for Disney+ can live on Hulu.

As part of this new deal, Comcast's NBCUniversal will continue to license content to Hulu through late 2024, but with NBCUniversal due to launch its own streaming service next year, there are some tricky stipulations. But the real kicker comes in 2022, when NBCUniversal has the right to cancel most of its content-licensing agreements with Hulu, which means shows like Parks and Recreation could be departing to head to NBCUniversal's own streaming service. But, during Disney's Investor Day briefing of Disney+ and its post-Fox plans, Kevin Mayer, chairman of the direct-to-consumer division, said the company is "likely" the company will be bundling together Hulu, ESPN+, and Disney+ for "a discounted price".