- Disney announced the deal on Wednesday and it will be completed at the end of this month
- Comcast has made a provision that forces the buyout at a minimum valuation
- It’s unclear what impact this will have on Disney’s streaming packages or pricing
Comcast has made a provision that will force Disney to buy out its 33 percent stake in Hulu for at least $8.6 billion. This sets in motion a deal that gives Disney full ownership of the streamer and the freedom to merge it with Disney+.
Disney announced the move on Wednesday and should close the deal before the end of the month. The sales price could rise if an independent appraisal shows Hulu is worth more.
The Burbank, California-based entertainment giant acquired a controlling stake in Hulu as part of its $71 billion acquisition of 21st Century Fox’s film and television assets.
The deal gave Disney a competitive edge in the streaming wars, allowing it to sell Disney+ in a discounted bundle with ESPN+ and Hulu. It’s unclear what impact full ownership of Hulu will have on Disney’s plans for future streaming options and pricing.
The company said in a statement about the deal: “The acquisition of Comcast’s interest in Hulu at fair market value will further Disney’s streaming goals.”
Disney CEO Bob Iger is seen above. Comcast has made a provision that will force Disney to buy out its 33 percent stake in Hulu for at least $8.6 billion.
Hulu’s logo is seen on a laptop in a photo illustration. Comcast, the parent company of NBCUniversal, agreed in 2019 to sell its one-third stake to Disney as early as November 1.
Comcast, the parent company of NBCUniversal, agreed in 2019 to sell its one-third stake to Disney, which controls the service with a 67 percent ownership stake.
Under the terms of that agreement, either NBCU or Disney could activate the transaction as early as November 1, meaning NBCU initiated the sale to Disney on the first available date.
Under the terms of the settlement, Disney expects to pay NBCU approximately $8.61 billion by December 1.
That price represents NBCU’s 33 percent share of the $27.5 billion guaranteed minimum valuation for Hulu set in 2019, minus the expected outstanding capital call contributions that NBCU must pay to Disney.
The fair value of Hulu’s equity will also be assessed beginning September 30, 2023, subject to agreed terms.
If that value is determined to be greater than the guaranteed minimum value, Disney will pay NBCU the difference, Disney said.
Bankers representing each party will assess Hulu’s fair market value, according to regulatory filings.
Disney stock was little changed on the Hulu news, which was widely expected. The company’s shares are down nearly 9% since the start of the year (see above)
While the timing of the review process is uncertain, Disney expects it to be completed in 2024.
In remarks at a Goldman Sachs conference this fall, Comcast CEO Brian Roberts called Hulu a “scarce kingmaker asset” that is “much more valuable today” than when the deal initially closed.
Hulu had 48.3 million subscribers at the end of Disney’s third quarter, compared to 28 million paid subscribers for Comcast’s Peacock streaming service at the end of the quarter.
Disney+ had 146.1 million global subscribers at the end of Disney’s third quarter.
Netflix, with a market capitalization of roughly $184 billion, had about 247.2 million paying subscribers worldwide at the end of the third quarter.