US: Disney gains full control of Hulu in Comcast US$27.5B deal

Walt Disney has inked an agreement with Comcast to take full control of video streaming service Hulu, in a US$27.5 billion transaction that will challenge rival Netflix in the US.

Comcast intends to sell its 33% investment in Hulu to Disney as early as January 2024, however the agreement will enable Disney to take full control immediately. This allows Comcast to reap the rewards of its investment in a company it projects will continuously grow over the next five years.

Called a “put/call” agreement, Comcast can require Disney to buy NBCUniversal’s interest in Hulu, and Disney can require that NBCUniversal sell that interest to Disney for its market market value at that future time.

Disney and Comcast have agreed to fund Hulu’s recent purchase of AT&T’s 9.5% interest in Hulu, pro rata to their current two thirds/one third ownership interests. Going forward, Comcast will have the option to fund its proportionate share of Hulu’s future capital calls and will be diluted if it elects not to fund.

The two companies announced on Tuesday, 15 May, that whether Comcast participated or not in future investments in Hulu, its stake in the company would not fall below 21%, guaranteeing it at least US$5.8 billion from Disney when it assumes full ownership by 2024.