The Walt Disney Company and Comcast Announce Future For Hulu
The Walt Disney Company and Comcast Corporation have announced that effective immediately Disney is assuming full operational control of Hulu. This is in response to “put/call” agreement have entered into for NBCUniversal’s 33% ownership interest in Hulu. The agreement states that starting as early as January 20204 Comcast can require Disney to buy NBCUniversal’s interest in Hulu. The agreement also states that Disney can require NBCUniversal to sell that interest to Disney for its fair market value at that future time. Independent experts will assess Hulu’s fair market value at that time. But, Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5 billion.
Robert A. Iger
“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. 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,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company, in a statement this morning.
Disney and Comcast Agreement
Disney and Comcast have agreed to fund Hulu’s recent purchase of AT&T Inc.’s 9.5% interest in Hulu, pro rata to their current two thirds/one third ownership interests and, 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. The Walt Disney Company has agreed that only $1.5 billion of any year’s capital calls can be funded through further equity investments with any capital in excess of that annual amount being funded by non-diluting 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% such that Comcast is guaranteed to receive at least $5.8 billion under the put/call agreement.
In addition to the put/call agreement, Comcast has agreed with Hulu to extend the Hulu license of NBCUniversal content and the Hulu Live carriage agreement for NBCUniversal channels until late 2024 and to distribute Hulu on its Xfinity X1 platform. NBCUniversal can terminate most of its content license agreements with Hulu in three years’ time, and in one year’s time NBCUniversal will have the right to exhibit on its own OTT service certain content that it currently licenses exclusively to Hulu in return for reducing the license fee payable by Hulu.
Forward Looking Statements:
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include expectations regarding our business plans, products, expectations regarding growth and performance, and other statements. Forward-looking statements herein may contain words such as “will,” “may,” “expect,” “believe,” similar expressions, and variations or negatives of these words. These statements are made on the basis of management’s views and assumptions regarding future events and business performance as of the time the statements are made. Management does not undertake any obligation to update these statements.
Actual events may differ materially from those expressed or implied. Such differences may result from actions taken by the Company, as well as from developments beyond the Company’s control, including changes in competitive conditions; consumer preferences; international, political, regulatory, health concern and military developments; and changes in domestic and global economic conditions that may affect our businesses generally. Additional factors are set forth in the Company’s Annual Report. They can be found on Form 10-K for the year ended September 29, 2018 under Item 1A, “Risk Factors,” and subsequent reports.
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