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Disney is now the only one to have his hands on the wheel of Hulu.
Disney and Comcast have announced an agreement under which Disney will assume full operational control of Hulu, effective immediately. In five years, Comcast has agreed to sell its stake in Hulu to Disney for at least $ 5.8 billion.
As part of this agreement, Comcast's NBCUniversal will continue to license Hulu until the end of 2024. However, as early as next year, NBCU will have the right to withdraw from Hulu previously licensed programming exclusive to Hulu. Hulu. basis of a reduced license fee). And by 2022, NBCUniversal will have the right to cancel most of its content licensing agreements with Hulu. NBCU plans to launch a free and ad-supported streaming service next year.
"We are now able to fully integrate Hulu into our direct-to-consumer business and leverage the power of the brands and creative engines of The Walt Disney Company to make the service even more appealing and offer greater value for consumers, "Disney CEO and CEO Bob Iger said in a statement about the deal.
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With full operational control, Disney will have the flexibility to set a new strategic roadmap for Hulu – including launching the service internationally.
Comcast / NBCU will retain its 33% stake in Hulu. As of January 2024, Comcast may require Disney to buy NBCU's stake in Hulu. Similarly, Disney may require NBCU to sell its stake in Disney for its fair market value at that time, companies said Tuesday.
Disney has guaranteed a sale price of Comcast's stake in Hulu that will represent a joint venture video streaming venture worth at least $ 27.5 billion. The companies stated that upon the sale of NBCU's stake in 2024, the fair market value of Hulu will be "assessed by independent experts".
Steve Burke, CEO of NBCU, said the agreement between Hulu and Disney was "a perfect result for us."
"We strongly believe in the area of direct sales to the consumer and our content is a key factor in this ecosystem," Burke said in a statement. The extension of the Hulu Content License Agreement "will generate for us significant cash flow, while providing us with maximum flexibility for programming and distribution on our own direct-to-consumer platform." , as we develop this business. Significantly, this transaction also confirms the value of our stake, opens the door to liquidity and ensures our continued participation in Hulu's success. "
Comcast has agreed to extend Hulu's NBCU content license and Hulu's live television service distribution agreement for NBCU channels until the end of 2024, as well as to distribute Hulu on its Xfinity platform. X1. But most licensing agreements can not be signed by 2022, the companies said. The NBCU streaming service, which is expected to announce next year, will feature "new originals and a huge library of old favorites … The most watched shows by viewers are coming back at home, "said Linda Yaccarino, Director of Advertising and Client Partnerships at NBCU, an initial event on Monday.
Last month, AT & T sold its 9.5% stake in Hulu to Disney and NBCU for $ 1.43 billion, worth $ 15 billion for Hulu. Disney and Comcast have agreed to allocate this purchase on a pro rata basis, which would give Disney a 66% and 33% interest in Comcast / NBCU.
Disney acquired 60% of Hulu's capital after acquiring $ 71 billion of 21 Century Fox's entertainment assets and was actively seeking a way to secure 100% of the company in discussions with Comcast.
The value of Hulu's interest in Comulu in five years depends on the amount of funds it continues to invest in the joint venture.
Comcast will be able to finance its share of Hulu's future capital requirements, but the conglomerate is not obliged to do so. Hulu has invested more – and lost more – in recent years. For 2018, Hulu lost about $ 1.5 billion, compared to $ 920 million a year earlier, calculated on the basis of the proportional loss reported by Comcast. According to Disney, Hulu's capital fund appeals to its remaining two parents will be capped at $ 1.5 billion a year (and if that requires more than that, Hulu will fund them with non-dilutive debt).
If Comcast chooses not to continue to fund Hulu in the future, its share will be diluted. Regardless of this decision, Disney has agreed that Comcast's stake in Hulu will never be less than 21%. In other words, Disney has guaranteed that it would pay Comcast at least $ 5.8 billion to buy back its stake in Comcast / NBCU.
Disney sees Hulu as a key pillar of its direct-to-consumer communication strategy: it offers a more adult-oriented entertainment offering, alongside the upcoming Disney Plus (launch in November in the US) and the ESPN Plus Sports Package. Disney says it is likely that the trio of streaming services will be bundled at some point.
At Disney Investor Day, April 11, Christine McCarthy, Disney's chief financial officer, predicted that Hulu's paid subscriber base would reach 60 million by the end of the fiscal year 2024. That would be more than double the 26.8 million paid submarines that Hulu had announced earlier. this month (+ 16.5% compared to the end of 2018).
McCarthy also told analysts that Disney expects Hulu's operating losses to reach $ 1.5 billion in Disney's 2019 fiscal year (ending in September), and that Hulu would be potentially profitable from the start. year 2023.
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