Disney gets full control of Hulu after agreeing with Comcast

Disney and Comcast announced an agreement that would allow them to take full operational control of Hulu, effective immediately. The agreement provides that Comcast will sell its stake in Hulu to Disney in the next five years for an amount of at least $ 9.2 billion.

However, this is not inconsequential for Hulu subscribers. Comcast's NBCUniversal will have the right to cancel most of its content license agreements with Hulu by 2022 as part of this agreement. In addition, the programming of NBCUniversal, which was previously licensed exclusively to Hulu, could be withdrawn in one year. Although this does not explicitly mean that this content will be extracted from Hulu, it means that this content can be displayed on other streaming services.

While Disney will immediately begin to exercise full control over Hulu, Comcast's NBCUniversal will retain its pre-existing 33% stake in Hulu. However, Comcast may require Disney to redeem NBCU's interest in Hulu as of January 2024. Conversely, Disney may require NBCUniversal to sell the 33% interest in Disney for its fair market value on the same date (January 2024).

As part of this agreement, Disney has guaranteed Comcast a sale price of its stake in Hulu representing at least $ 27.5 billion worth of service. Doing the calculation with a 33% stake in Comcast means that Comcast's interest will be valued at $ 9.2 billion or more when the sale is made in 2024. The fair market value of Hulu for their 33% will be " evaluated by independent experts ".

Fortunately for Hulu subscribers, NBCUniversal has already agreed to extend its content license for Nulu and Hulu's live television service contract with NBCU channels until the end of 2024. This content will remain safe for the moment. As part of this agreement, Comcast will continue to distribute Hulu content on its Xfinity X1 platform.

Even though NBCU content will remain on Hulu at least until the end of 2024, Comcast can still terminate most of its content license agreements with Hulu over the next three years. From here a year, NBCUniversal will be able to distribute some content on its own service that currently holds an exclusive license to Hulu, in consideration for a reduced fee due by Hulu. Disney and Comcast also agreed to fund Hulu's recent purchase of AT & T Inc.'s 9.5% interest in Hulu.

From now on, Comcast will have the opportunity to fund its share of Hulu's future capital calls and will be diluted if they choose not to fund in the future. Disney also agreed that only $ 1.5 billion in annual capital calls from a corporation can be funded through additional equity investments funded by non-dilutive debt. Disney has agreed that Comcast's stake in Hulu will never be less than 21% and that it is guaranteed that Comcast will receive a minimum of $ 5.8 billion under their sales contract.

Of course, now that Disney is fully in control of Hulu, there is no indication that this will affect Disney's distribution methods as they exploit both Hulu and their upcoming Disney + streaming service.

Source: Variety

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