Walt Disney Co. and Comcast Corp. jointly announced Tuesday that Disney would take operational control of the streaming video site Hulu and that they'd struck a deal under which Disney would purchase Comcast's 33 percent share.
Under the agreement, Comcast can require Disney to buy its interest in Hulu by January 2024. Disney can also require Comcast to sell its stake at market value at that time. The deal establishes a minimum total valuation of Hulu at that time of $27.5 billion, which means Comcast could come away with more than $9 billion for its stake as long as it continues to invest in the service.
Disney acquired the controlling stake in Hulu in March when it bought much of Rupert Murdoch's 21st Century Fox. Now Disney has operating control, which gives the Burbank entertainment giant free rein to run the service as it wishes. This portion of the deal was important because Disney and Comcast have had a testy relationship recently: Comcast Chief Executive Brian Roberts jumped into the bidding for Fox last year, driving up the price Disney ultimately had to pay.
Taking full control of Hulu bolsters Disney's commitment to direct-to-consumer distribution of its content. Disney is launching a $6.99-a-month streaming service later this year - Disney+ - that will offer a wide array of the company's TV and movies.
"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."
Hulu launched in 2007 as a joint venture between Fox and NBC, which is now owned by Comcast. In the last decade, it has grown to one of the most popular streaming services because it is filled with hits from the broadcast networks. Disney joined the service a couple years later, and Time Warner Inc. eventually took a 10 percent stake. Telecommunications giant AT&T Inc., which now owns the Time Warner properties, sold its nearly 10 percent interest in Hulu for $1.43 billion to Disney last month. AT&T is choking on more than $170 billion in debt, which it took on to finance its forays into media, including buying DirecTV in 2015.
Comcast agreed to help Disney buy out AT&T's stake in the service.
Under the terms of the deal, Hulu's fair market value will be assessed by independent experts but it will be at least $27.5 billion.
The agreement also requires Comcast to provide NBCUniversal shows and its TV channels to Hulu until late 2024. In return, NBCUniversal will also get the rights to carry shows licensed to Hulu on its own direct-to-consumer streaming service, which is expected to launch in 2020.
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