- Disney announced the deal on Wednesday and will close by the end of the month
- Comcast triggered a provision that forced the acquisition at a minimum valuation
- It’s unclear what impact this will have on Disney’s streaming packages or prices
Comcast has put into effect a clause forcing Disney to buy out its 33 percent stake in Hulu for at least $8.6 billion, ushering in a deal that gives Disney full ownership of the streamer and the freedom to run it to merge with Disney+.
Disney announced the move on Wednesday and must complete the deal before the end of the month. The selling price could rise if an independent appraisal shows Hulu is worth more.
The Burbank, California-based entertainment giant gained a majority 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 and allowed Disney+ to be sold in a discounted package with ESPN+ and Hulu. It’s unclear what impact the full acquisition of Hulu will have on Disney’s plans for future streaming options and pricing.
The company said in a statement about the deal: “Acquiring Comcast’s interest in Hulu at fair market value will advance Disney’s streaming goals.”
Above is Disney CEO Bob Iger. Comcast has enacted a provision that will force Disney to buy out its 33 percent stake in Hulu for at least $8.6 billion
In a photo illustration, the Hulu logo is seen on a laptop. Comcast, the parent company of NBCUniversal, agreed in 2019 to sell its one-third stake to Disney as early as November 1st
Comcast, NBCUniversal’s parent company, agreed in 2019 to sell its one-third stake to Disney, which controls the service with a 67 percent stake.
Under the terms of that agreement, either NBCU or Disney could trigger the transaction as early as November 1 – meaning NBCU will initiate the sale to Disney on the first available date.
Under the agreement, Disney expects to pay NBCU about $8.61 billion through Dec. 1.
This price represents NBCU’s 33% share of Hulu’s minimum guaranteed valuation of $27.5 billion set in 2019, less expected outstanding capital call contributions that NBCU must pay to Disney.
The fair value of Hulu’s equity will also be measured as of September 30, 2023 under the agreed terms.
If that value is found to be higher than the minimum guaranteed value, Disney will pay NBCU the difference, Disney said.
Bankers representing both parties will assess Hulu’s fair market value, according to regulatory filings.
Disney shares were little changed on the Hulu news, which was widely expected. The company’s shares have fallen nearly 9% since the beginning of the year (see above).
While the timing of the review process is uncertain, Disney expects it to be completed in 2024.
Comcast CEO Brian Roberts, speaking at a Goldman Sachs conference this fall, called Hulu a “scarce kingmaker asset” that is “far more valuable today” than when the deal originally 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 subscribers worldwide at the end of Disney’s third quarter.
Netflix, which has a market capitalization of about $184 billion, had about 247.2 million paid subscribers worldwide at the end of the third quarter.