The Disney/Universal Studios Fantasy Trade That Could Happen!
Disney CEO Bob Iger recently suggested that he’s open to selling Hulu, one of his three streaming services.
On its own, that story has nothing to do with theme parks. However, a Wall Street investor’s speculation and knowledge of Disney’s history open some intriguing possibilities.
Photo: THIERRY CHESNOT/GETTY IMAGES
Could Disney work out a trade wherein it sells Hulu in exchange for cash plus some valuable theme park rights? I think yes. Here’s what’s going on.
The Speculation Involving a Hulu Sale
Photo: Hulu
Let’s start with the boring business stuff that’s less interesting to you.
As you should know by now, Disney owns two-thirds of Hulu but controls the streaming service entirely.
Comcast, who owns one-third of Hulu, ceded its control since it lacked voting interest.
Credit: Craig Blankenhorn/Hulu
Disney could have imposed its will on anything with a two-thirds voting majority. It’d be a waste of both companies’ resources to quibble over minutiae.
However, as part of the agreement, Disney promised to pay Comcast for its share of Hulu in 2024.
Comcast
At some point next year, Disney will cut Comcast a check for around $10 billion, possibly even more.
The corporations are currently in arbitration regarding the valuation of Hulu. Whatever the arbitrator decides, Disney will pay Comcast one-third of that.
Image Credit: Disney
Comcast enjoys a downside guarantee of $8.6-$10 billion, depending on which report you believe.
Disney can avoid paying this money by doing the opposite. It could sell to Comcast or some other corporation.
Photo: skillastics.com
From Disney’s perspective, it would lose Hulu. Conversely, the company would likely gain at least $20 billion in the transaction.
More importantly, Disney could negotiate terms to snag some other rights along the way.
So, the quick influx of cash would allow Disney to pay down its sizable debt, which was $45.1 billion at the end of the most recent fiscal quarter.
A Hulu sale wipes out approximately half that debt, albeit at the cost of the Disney Bundle, Bob Iger’s pride and joy.
Photo: Hulu
Which would you rather have, a streaming trifecta that’s the envy of the industry or substantially more spending power?
Well, the thing about Bob Iger is that he’s smart enough to broker a better deal via trade. And we know this because…
Disney’s Most Famous Trade
(Matt Stroshane, photographer)
In professional sports, players often change teams due to free agency and trade.
Eventually, many of the most famous players return to their teams.
PHOTO BY MIKE EHRMANN/GETTY IMAGES
Sometimes, they play out a final season as Albert Pujols recently did.
In other instances, these pros sign one-day contracts to retire with their favorite team.
Credit: Disney
What does this have to do with Disney? In 1927, Walt Disney famously took the worst train ride of his life, which proved to be a blessing in disguise.
Disney traveled across America to discuss plans for his wildly successful character, Oswald the Lucky Rabbit.
Photo: Disney
Once the artist arrived at the meeting, he learned he didn’t own the rights to Oswald. Even worse, many of his animators had quit Disney.
They joined a competitor, the one who controlled Oswald, and planned to create more Lucky Rabbit cartoons without the oversight of their (now former) boss.
At that moment, Walt Disney simultaneously lost his income and the character he created. It was abject humiliation.
The happy ending occurred when the now-highly motivated entrepreneur spent the train ride home inventing a new character, a mouse named Mickey.
Still, the loss of Oswald the Lucky Rabbit bothered Walt Disney until his dying days.
Knowing this part of Disney’s history, Bob Iger later traded Al Michaels for Oswald the Lucky Rabbit.
I realize this statement sounds ridiculous, but it’s absolutely true. MickeyBlog’s Justin Hermes even explained the story in full.
Photo: Disney
A competing NFL broadcast required the services of Al Michaels, who had recently extended his ESPN contract. Disney agreed to allow Michaels to end the deal immediately.
In exchange, Disney regained ownership of Oswald the Lucky Rabbit in 2006, nearly 80 years after Walt Disney lost the rights.
The Potential Disney/Comcast Trade
With the NFL Draft ahead, sports sites are flush with trade speculation. Unexpectedly, we can do the same thing with Disney right now.
Here’s the odd part. Disney’s perfect trade partner in such scenarios is Comcast.
In 2019, Disney acquired most of Fox’s entertainment assets.
At the time, Disney had nearly assembled the entirety of the Marvel character catalog. Currently, only three exceptions exist.
You can certainly name the most famous exception, the Spider-Man universe.
Photo: Sony
Sony owns these licensing and distribution rights and won’t sell except for a “break glass in case of emergency” scenario.
Someone would probably need to buy Sony’s film and television studios to acquire these rights, and those alone may be as valuable as Comcast’s Hulu stake.
Image: Marvel
The other two characters are Namor and The Incredible Hulk, both of whom have appeared in the Marvel Cinematic Universe.
However, Disney must negotiate with their licensing and distribution holder to use the characters, and that’s…NBCUniversal, a Comcast subsidiary.
Source: Universal Studios
You may recall the story that Disney cannot create a standalone Namor movie due to those licensing issues.
Similarly, Disney cannot make a Hulk solo movie, at least not without jumping through a bunch of hoops.
Source: Marvel Comics
That’s why The Hulk appears in other projects like Thor: Ragnarok and She-Hulk instead.
Disney could feasibly require the return of those Namor/Hulk rights as part of a Hulu sale with Comcast. Remarkably, that’s not all, either.
Expanding the Trade to Theme Parks
Photo: Universal
As a reminder, Marvel Super Hero Island resides at Universal Orlando Resort rather than Walt Disney World.
Disney managed to build Avengers Campus at Disney California Adventure (and Disneyland Paris), but it cannot follow suit at Walt Disney World.
Photo: Disneyland
Many years ago, Marvel faced bankruptcy and licensed the theme park rights for its characters as a desperate move to grab some quick cash.
Universal Studios, the buyer, cleverly wrote the contract such that it would maintain those rights in perpetuity.
Even though Disney owns the entire Marvel library, it cannot create Spider-Man movies or build an Avengers Campus east of the Mississippi.
Similarly, Universal Studios cut a deal with Fox to create Springfield, a themed land based on The Simpsons, at its theme parks.
According to the terms of the deal, Universal will maintain these rights through 2028. It was a 20-year agreement that did NOT include extensions in perpetuity.
In five years, Disney can reclaim the rights to theme park usage of characters from The Simpsons.
While Disney can wait out those rights, you can see where I’m going with this premise.
The Potential Disney/Comcast Mega-Trade
Credit: The Simpsons
Disney could feasibly negotiate a deal to sell Comcast total control of Hulu.
In exchange, Disney would receive cash, probably at least $20 billion.
Plus, Disney could clean up its current licensing issues by reclaiming the movie and television rights to The Incredible Hulk and Namor.
In the Parks division, Disney would regain full control of the usage of The Simpsons and (most importantly) Marvel.
If this happened, Disney could build its own version of Springfield and/or a larger Avengers Campus.
In fact, if Disney ever built a fifth theme park at Walt Disney World, these two intellectual properties could anchor the project!
Photo: Marvel
Analysts keep discussing the revenue aspects of a Hulu sale.
For Bob Iger, a visionary who has always seen the whole board, there’s MUCH more in play here.
Disney’s CEO could reset the playing field in streaming, cut the company’s debt in half, and create new theme park opportunities in a single transaction.
That’s the kind of bold move that exemplified Iger’s first tenure as Disney CEO.
Source: Disney
So, I believe a trade like this is at least a possibility, maybe even a likelihood…if Disney chooses to sell Hulu.
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