Disney Announces It Will Purchase Remaining Stake In Hulu From Comcast
Today, Disney has officially announced that it is going to be purchasing the remaining 33% stake in Hulu, which is currently owned by Comcast, who has exercised its right under the put/call arrangement between the two companies, which was included in the contract initially made between the two companies in 2019, when Disney purchased 20th Century Fox, gaining the majority share in Hulu.
The acquisition of Comcast’s stake in Hulu at fair market value will further Disney’s streaming objectives. Disney CEO Bob Iger has previously said they are planning on making Hulu content available within Disney+ by the end of the year.
Under the terms of the put/call arrangement, by December 1st, Disney expects it will pay NBCU approximately $8.61 billion, representing NBCU’s percentage of the $27.5 billion guaranteed floor value for Hulu that was set when the companies entered into their agreement in 2019 minus the anticipated outstanding capital call contributions payable by NBCU to Disney. Under the appraisal process agreed to by Disney and Comcast, Hulu’s equity fair value will be assessed as of September 30, 2023, and if the value is ultimately determined to be greater than the guaranteed floor value, Disney will pay NBCU its percentage of the difference between the equity fair value and the guaranteed floor value. While the timing of the appraisal process is uncertain, we anticipate it should be completed during the 2024 calendar year.
In September, Comcast announced it had made an agreement with Disney to pull forward the date of the put/call deal, and both companies have already hired investment banks to come up with a valuation. Hopefully, we get some more information on the deal pretty soon, but it’s likely the two companies have already been in communication on how this is going to happen, following the recent developments.
Once Disney completes its purchase of Hulu, we will likely then see a major change to its direct-to-consumer plans in the US, especially when it can bring together its streaming services to offer a complete package. Disney has been planning for this moment for years and is also making plans to sell some other assets like Star India and some ABC local networks to help counterbalance this purchase.
Do you think the deal will close in December? Let us know on social media!
Roger Palmer
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