Disney takes full control of Hulu from Comcast and moves closer to owning all the things

Samantha Cossick
SC
Samantha Cossick
May 14, 2019
  • Disney to assume “full operational control” of Hulu effective immediately
  • Comcast/NBCUniversal gives up control as it prepares to launch its own streaming service
  • No changes to Hulu pricing announced as part of the agreement

 
Disney is expanding its media footprint. The Walt Disney Company will take “full operational control” of Hulu — effective immediately — from Comcast, per an announcement earlier today.

As part of the agreement, Comcast can require Disney to purchase NBCUniversal’s 33% stake in Hulu at a valuation of at least $27.5 billion — even if Hulu is valued for less at the time — as early as January 2024.

Details of the deal

According to the agreement, Comcast is guaranteed at least $5.8 billion for its Hulu interest. Disney will pay Comcast for its NBC shows until late 2024 and NBC channels will be on Hulu Live for a higher rate than previously agreed upon.

However, Comcast made provisions in the agreement that would allow them to prepare for the launch of their own streaming service via NBCUniversal.

NBCUniversal reserved the option to pull its content within three years. Additionally, within a year, NBCUniversal can show “certain content that it currently licenses exclusively to Hulu” on its own streaming service in exchange for “reducing the license fee payable by Hulu.”

“We believe strongly in the direct-to-consumer space and our content is a key driver of that ecosystem,” NBCUniversal CEO Steve Burke said in a statement.

“The extension of the Hulu content-licensing agreement will generate significant cash flow for us, while giving us maximum flexibility to program and distribute to our own direct-to-consumer platform, as we build that business. Significantly, this transaction also affirms the value of our stake, provides a path to liquidity and ensures our continued equity participation in Hulu’s success.”

The streaming service, owned and operated by Hulu LLC, was previously a joint venture between Disney, Comcast (via NBCUniversal) and AT&T with Disney owning a 70% majority share.

Disney became Hulu’s majority owner in March after acquiring 21st Century Fox. Hulu agreed to buy back AT&T’s 9.5% stake (from when it acquired Time Warner) in April. That purchase will now be partly financed by Disney and Comcast.

What this means for subscribers

As of right now? Nothing.

The agreement doesn’t outline any changes to pricing, and it will take up to five years to complete. In fact, Hulu actually cut the price of its basic subscription from $8/mo. to $6/mo. while raising its Hulu + Live TV package from $40/mo. to $45/mo. earlier this year.

That being said, there’s potential for changes in Hulu plans and pricing structure to come later down the road due to portions of the agreement, especially those related to licensed content.

Despite success with some original content, such as “The Handmaid’s Tale,” Hulu has yet to grab viewers with original series and movies like other streaming services, such as Netflix and HBO.

A 2018 study found that 97% of Hulu streams over a 12-month period, ending September 2017, were of licensed content. Additionally, 89% of Hulu subscribers watched licensed programming first before they watched original content.

With the potential to lose licensed content as well as having to pay more for licensed content for Hulu Live, it’s expected that Hulu will begin to invest heavily in creating their own original programming, especially with Disney’s backing.

Disney has already announced their own streaming service, Disney+, that will have an emphasis on new and old programming from their vault of Disney, Marvel, Pixar and Star Wars entertainment. It’s thought that Disney+ will remain family-friendly while Hulu may serve as the edgier counterpart.

Shop internet plans