Disney, Comcast reach deal on Hulu ownership

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The Walt Disney Co. has reached a deal with Comcast to assume "full operational control" of streaming site Hulu, the companies announced on Tuesday.

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Comcast has a stake in Hulu through its subsidiary NBCUniversal, which owns a 33 percent interest in the company.

Under the terms of the agreement known as a "put/call," Comcast can require Disney as early as January 2024 to purchase NBCUniversal's stake in Hulu at "its fair market value at that future time," according to a release. Disney can also require that Comcast sell the stake.

The value will be "assessed by independent experts" at the time of the sale, but Disney agreed to a minimum equity value of $27.5 billion.

TickerSecurityLastChange%Chg
DISWALT DISNEY COMPANY132.79+0.06+0.05%
CMCSACOMCAST CORP.42.67-0.06-0.14%

Comcast also agreed to extend Hulu's licenses for NBCUniversal content and to distribute the streaming site on its Xfinity X1 platform, a set-top device that provides access to applications like Netflix.

"NBCUniversal can terminate most of its content license agreements with Hulu in three years’ time," the statement reads.

After one year, Comcast can also feature NBCUniversal content currently exclusive to Hulu on its own streaming platform "in return for reducing the license fee payable by Hulu."

The two firms will both fund Hulu's recent purchase of AT&T's 9.5 percent stake in the company based on the existing ownership structure.

The announcement drew immediate praise from some shareholders, including Gullane Capital Partners manager partner Trip Miller.

"It's important for [Disney] to have full control of the direction and content on Hulu," he told FOX Business. "Retaining [NBCUniversal] content is important to [Disney] as they continue to grow the subscriber base with attractive content."

Postponing the closing deadline to January 2024 also allows Disney to forgo additional debt in the near-term and gives Comcast a potential upside if Hulu's valuation grows over the next five years, Miller added.

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Disney is preparing to launch its own streaming site called "Disney+" on Nov. 12 that will feature original content from some of its most popular franchises, as well as classic Disney movies.

Executives positioned Hulu as both an avenue for digital advertising, which has the potential to reach $50 billion in annual earnings by 2020, and home to Disney's edgier content.

No other platform can offer the “viewability, brand safety, targeting and measurement, all inside the [best] storytelling and the largest selection of shows anywhere [of Hulu],” Hulu CEO Randy Freer recently told Disney investors.

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Disney gained its stake in Hulu through the company's $71.3 billion of key 21st Century Fox assets.