Walt Disney has struck a deal with Comcast that will see it take full operational control of video streaming service, Hulu, with immediate effect. The companies have described the deal as a “put/call” agreement regarding Comcast-owned NBCUniversal’s 33 per cent stake in Hulu.
The terms of the agreement mean that, 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 $27.5bn (£21.3bn).
Disney and Comcast have agreed to fund Hulu’s recent purchase of AT&T’s 9.5 per cent interest in Hulu, pro rata to their current two thirds/one third ownership interests and, 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.
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.
Hulu currently has 26.8m paying subscribers, compared to Netflix’s 149m. The analyst, eMarketer, forecasts that in the US, Hulu will have 63.9m individual users this year (based on 2.5 users per subscription), a 19.3 per cent increase on last year.