Comcast is guaranteed to receive at least $5.8 billion under a “put/call” agreement
Disney and Comcast have reached a deal that will give the Mouse House full operational control of Hulu.
The two companies have entered into a “put/call” agreement regarding NBCUniversal’s 33% stake in the streaming service.
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.
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 has agreed that Comcast’s ownership interest in Hulu will never be less than 21% such that Comcast is guaranteed to receive at least $5.8 billion under the put/call agreement.
“Hulu represents the best of television, with its incredible array of award-winning original content, rich library of popular series and movies, and live TV offerings,” Disney CEO Bob Iger said in a statement. “We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers.”
In March, Disney closed its deal to buy 21st Century Fox film and TV assets, which gave the company a 60% majority stake in Hulu.
Comcast has also agreed to extend its content license with Hulu for NBCU shows through 2024, though starting in 2020 NBCU will have the ability to put some of that content on its upcoming streaming service as well. Hulu would then pay a lower license fee since it would no longer be exclusive. NBCU can terminate most of its content license agreements with Hulu in three years’ time.
The content licensing deal with Hulu also extends carriage of NBCU channels on Hulu’s live TV streaming bundle, Hulu Live and will distribute Hulu on its Xfinity X1 platform.
During Comcast’s earning’s last month, CEO Brian Roberts called Hulu “really valuable” and added that “we’re really glad we own a large piece of it.” Comcast is planning to launch its own streaming service under the NBCUniversal brand next year.
Earlier in April, AT&T sold its 9.5% stake in Hulu back to Hulu. As part of Tuesday’s deal, Disney and Comcast will fund the purchase in line with their respective ownership stakes. 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.