When the Walt Disney Company purchased 20th Century Fox, there was much more to the deal than just buying studios like FX or Searchlight. It also came with a 30% stake in the US streaming service, Hulu.
Shortly after the purchase was complete in 2019, Hulu made an agreement with TimeWarner to buy its 10% stake, leaving Disney with 66% of Hulu and Comcast with 33%.
In May 2019, Disney and Comcast announced their intentions with Hulu, with Disney getting complete operational control of Hulu.
One aspect of the contract was, that from as early as January 2024, Comcast can require Disney to buy NBCUniversal’s interest in Hulu and 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, 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.
Also, part of the deal was that Comcast has 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 creation of Hulu content.
After a year, NBCUniversal will have the right to exhibit on its own streaming service, Peacock, certain content that it currently licenses exclusively to Hulu in return for reducing the license fee payable by Hulu. This is why some content is presently shared between Hulu and Peacock.
But there was another part of the deal was that 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 could terminate most of its content license agreements with Hulu in three years’ time, which is now.
According to the Wall Street Journal, Comcast had until Friday 11th February 2022 to decide on if it wanted to terminate most of its content license agreements with Hulu.
Nothing has been made official, but WSJ is reporting that Comcast is close to making the deal official, which means that shows like “Saturday Night Live” and “The Voice,” will be leaving Hulu and heading to Peacock in the Fall. This means that these shows will air on Peacock after they air on broadcast and not Hulu. Should Comcast pass on this option, it means that these shows will stay on Hulu until 2024.
And if Comcast does exercise its contract to remove content, not everything would be removed, since some NBC shows like “30 Rock” and “Parenthood” and some films, wouldn’t be included due to other commitments.
Comcast can either try to boost up its own streaming service, Peacock, with more exclusive content, or it can hold out in the hope that Hulu will be worth more in 2024, so Disney has to pay Comcast more money.
During a recent Comcast earnings call, NBCU CEO Jeff Shell, said:
So obviously, much of our strong NBC content, as Brian mentioned, premieres on Hulu. And over time, we’d like to bring that back to Peacock. But any discussions that we’re having with Hulu, or will have with Hulu we’re really not going to comment on. So there’s nothing really to report at this time.”
In that same earnings call, Comcast CEO Brian Roberts said that when Comcast brought NBC Universal 10 years ago, it inherited a company that had committed really all of its content to Hulu.
“And all that content still resides on Hulu. So, the biggest and best — most relevant part of our content, at least from television, historical NBC and our cable nets and particularly NBC, are all licensed away, and that can change over time,”
However, Disney itself is torn on how to handle Hulu. As the streaming market grows, we are seeing consolidation between platforms. This past week, a merger between Discovery and WarnerMedia was given the go-ahead, likely leading to Discovery+ and HBO Max merging.
Disney+ is the main focus for the Walt Disney Company, and when Disney CEO Bob Chapek decided to incorporate general entertainment into Disney+ internationally with the introduction of Star as a sixth brand alongside Nat Geo, Marvel, Pixar and Star Wars. This instantly put an end to any global rollout plans for Hulu, as there simply wasn’t a need. Disney+ internationally has everything under one app, and this has resulted in a reduction in the number of subscribers lost, an increase in engagement and reduced costs.
Only this week, Bob Chapek said we would see more general entertainment content released on Disney+ in the United States, which has resulted in some content now being shared with Hulu and more is expected, since adults and teenagers want more content on Disney+.
Should Hulu lose access to NBC Content this year, it further strains Hulu, which Comcast doesn’t want to devalue, while also not wanting to hurt Peacock’s growth.
Ultimately, Comcast and Disney are still in arbitration over ending their Hulu partnership earlier, which would give both companies a chance to organise their streaming service strategy. Currently, neither company can 100% focus on building their own platforms while having Hulu.
Hopefully, an official announcement on NBC’s content on Hulu will be made soon.
What do you think of Comcast potentially pulling its content from Hulu?
Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom.