Disney takes full control over Hulu, Comcast to sell its stake in 5 years

Disney will assume full operational control of Hulu effective immediately and will purchase Comcast’s 33% ownership interest in the streaming company in five years, according to an announcement by Disney and Comcast.

Disney is moving head-on into the director-to-consumer business with its new Disney+ service debuting Nov. 12, 2019. The big question was what to do with Hulu, which was a venture originally launched by AT&T, Disney, 20th Century Fox and Comcast as a competitor to Netflix.

Once Disney purchased Fox’s interest it became the largest shareholder. Disney CEO Bob Iger recently said during an earnings call that Disney is bullish about Hulu.

The streaming service, he said is “the best consumer television proposition out there because it offers linear channels that include a lot of live news and sports, in-season stacking of network programming, a lot of great original programming, and then, of course, a lot of library beyond just the network library in season that I suggested.”

This control by Disney will allow it to move Hulu into the international market as well.

Under the agreement announced today, 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.

Disney and Comcast have agreed to fund Hulu’s recent purchase of AT&T Inc.’s 9.5% interest in Hulu, to their current two thirds/one third ownership interests. 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.

Comcast will also 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.