Comcast has agreed to hand control of the OTT TV platform Hulu to Disney. The latter already owns a majority of the shares and will assume full operational control of Hulu, effective immediately. In return, Comcast secured a guaranteed price for its stake in Hulu if its decides to sell to Disney in the next five years.
Under the put/call agreement, 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 time. Hulu’s value will be assessed by independent experts, but Disney has agreed to a minimum value of USD 27.5 billion for all of Hulu in order to determine a price to buy Comcast's stake.
Hulu was started as a joint venture of the US's top free-to-air broadcast networks: Fox, NBC and ABC (owned by Disney), as well as Time Warner, which has since been acquired by AT&T. Following Disney's acquisition of Fox, its stake in Hulu doubled to 60 percent. AT&T recently agreed to sell its 9.5 percent stake back to Hulu, which Comcast and Disney have agreed to finance pro rata for their shareholdings of respectively two-thirds and one third.
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 contribute. Disney has agreed that only USD 1.5 billion of any year’s capital calls can be funded through further equity investments, with any additional financing coming from debt. Whether Comcast funds its share of those equity capital calls or not, Disney has agreed that Comcast’s ownership interest in Hulu will never be less than 21 percent, such that Comcast is guaranteed to receive at least USD 5.8 billion under the put/call agreement.
Comcast has agreed to continue licensing its content to Hulu until late 2024 and to distribute Hulu on its Xfinity X1 platform. NBCUniversal can terminate most of its content licence agreements with Hulu in three years’ time, and in one year’s time NBCUniversal will have the right to show certain content on its own OTT service in return for reducing the licence fee charged Hulu.
