In March, before the Disney-Fox deal closed, Disney had a 30% stake in the Hulu streaming service. Just three months later, the company now has full operational control of Hulu.
In an announcement made this morning, Disney will take full operational control of the streaming service, with a looming outright purchase from Comcast. Under a new partnership, Disney and Comcast agree under the so-called “put/call” agreement that either party could require Comcast to sell NBCUniversal’s 33% ownership stake to Disney as soon as January 2024. The agreement hinges on an decided on market value of Hulu at a minimum of $27.5 billion. Likewise, Disney can force Comcast to sell NBCUniversal’s stake at a “fair market value” assessed independently.
The unique relationship speaks to how huge media conglomerates are working through licensing out their own programming, partnering with other platforms and trying to keep costs low yet still reach consumers where they’re most frequently consuming content.
Disney and Comcast will fund Hulu’s recent purchase of AT&T’s 9.5% stake in the service, in proportion to their current split in shares (Disney’s two-thirds vs Comcast’s one-third, respectively). Going forward, Comcast and Hulu agree that Comcast’s ownership interest in Hulu will never be less than 21%.
The move raised questions about what sort of Comcast programming would still be offered on the service, which Disney CEO Bob Iger hinted at during a conference call earlier this month. He said at the time that there was a “dialogue” with Comcast about the company potentially divesting its stake in Hulu.
“And you can expect that if that were to occur, there probably would be some ongoing relationship as it resulted to programming,” Iger said.
With Comcast and Disney’s new agreement, Hulu will continue to license NBCUniversal content and offer NBCUniversal channels on Hulu Live until late 2024. In addition, Hulu will still be available on the Xfinity X1 platform.
But in three years, NBCUniversal can end most of its content license agreements with Hulu and free up content for its own OTT service, which will roll out next year. In exchange, those licenses to Hulu—which are now exclusive—would be reduced in cost.
Disney’s role in Hulu was a large part of the company’s informative announcement on its new streaming service, called Disney+, that will offer consumers a wide range of content, both new and archival, when it launches Nov. 12. At the time, Disney execs teased a possible bundling package among Disney+, Hulu and ESPN+.