Hulu now lives in the mouse house.
The Walt Disney Company said Tuesday it will gain full operational control of Hulu as part of a "put/call" agreement with Comcast, under which Comcast can require Disney to buy NBCU's 33% Hulu stake at its fair market value as early as January 2024.
The future value of Hulu will be determined by independent experts, but Disney has guaranteed a minimum sale price representing a total equity value of $27.5 billion.
“Critically important for our future is to be able to connect with consumers wherever they are,” said Rita Ferro, president of advertising sales and partnerships at Disney, at the company’s upfront in New York on Tuesday. “All of the marketplace is investing in that space.”
With full control of Hulu, which has 28 million customers in the United States, Disney becomes a much more formidable competitor in the streaming wars. The media conglomerate announced the details of its ad-free Disney+ streaming service in April, which will include content from Disney’s core brands – Pixar, Star Wars, Marvel, The Disney Channel and National Geographic – and cater to family audiences.
Disney also has a third streaming service, ESPN+, which is its direct-to-consumer sports streaming platform with more than 2 million subscribers.
The Disney streaming family
While ESPN+ has ads but is focused on sports, and Disney+ has no ads, Hulu, on the other hand, is ad-supported. It also gives Disney an option for consumers who are fatigued by bundle overload and don’t want to pay for more content. And it provides a home for adult content on Disney-owned channels like FX, which “doesn’t belong” on Disney+, said John Landgraf, CEO of FX Network, at the upfront.
“[Disney CEO Bob Iger] has been explicit about the FX brand integrating into Hulu,” he said. “The audience and brand characteristics are really different than Disney. I don’t see them ever really being adjacent inside this new system.”
As part of the deal, Disney and Hulu said they will both fund Hulu’s recent repurchase of AT&T’s 9.5% stake (or $1.43 billion) in the streaming platform, valuing the company at $15 billion.
Comcast also agreed to extend Hulu’s license for NBCU content, both live and on demand, and to continue offering Hulu on its Xfinity X1 platform. NBCU will be able to terminate its contracts with Hulu within three years, and begin putting content it has exclusively licensed to Hulu in its own OTT platform in one year.