Disney takes full control of Hulu in US$5.8bn Comcast deal

Rivals agree 2024 payment option for 33% stake in streaming platform.

by Steven Impey

Disney takes full control of Hulu in US$5.8bn Comcast deal

Disney has been granted full operational control of global streaming platform Hulu after agreeing terms to buy Comcast’s 33 per cent share in the company for at least US$5.8 billion.

The two US media giants have entered a call agreement which gives Comcast the option to cash in on NBCUniversal’s interest in Hulu from as early as January 2024, while agreeing to relinquish control of its stake to Disney with immediate effect.

Hulu's current market value still needs to be assessed by an independent party. However, as part of the deal, Disney has guaranteed a sale price for Comcast’s stake based on a minimum valuation of US$27.5 billion.

The result ends speculation over the future of the OTT platform which, while best known as an entertainment provider, does carry rights to sports networks in specific US markets, including CBS Sports, Fox Sports, and Disney’s ESPN.

Disney chief executive Bob Iger confirmed during an earnings call last week that he had met with Comcast for talks over acquiring its Hulu stake.

In April, he also said that, in the event of acquiring full control of Hulu, the platform could form part of a bundled streaming package featuring both Disney’s ESPN+ and soon-to-launch Disney+ services, and ramp up the company’s push for more direct-to-consumer (DTC) options.

Under its terms with Comcast, Disney has also agreed that only US$1.5 billion of any year's capital calls can be funded through further equity investments, while the company insists that any capital above that annual threshold must be funded by ‘non-diluting debt’.

A statement read: ‘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 per cent, such that Comcast is guaranteed to receive at least $5.8 billion under the call agreement.’

Disney and Comcast have also agreed to fund Hulu's recent purchase of AT&T’s 9.5 per cent interest in the over-the-top (OTT) platform, for which Comcast could use to fund its proportionate share of any future capital calls, though that sum will be diluted if it elects not to.

In addition to the call agreement, Comcast and Hulu have also agreed to extend a licensed content deal with NBCUniversal on the platform, as well as a carriage agreement that keeps NBCUniversal channels on Hulu Live until late 2024 in exchange for the distribution of Hulu on Comcast’s Xfinity X1 platform.

However, the deal does allow NBCUniversal to terminate most of its content license agreements with Hulu in three years' time, while the Comcast-owned network also has the right to move any of its content that currently makes up Hulu’s exclusive carriage deal to its own OTT platform, while reducing the price of its licensed property.

According to CNBC, the business news outlet owned by NBCUniversal, Comcast has reconsidered the pricing of its upcoming streaming service – down from US$12 to around US$10 a month – after Disney announced its Disney+ service will cost US$6.99 per month when it goes live in December.