Disney to buy Comcast's stake in Hulu
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Disney has agreed to buy Comcast's 33% stake in Hulu, the company said Wednesday.
Why it matters: The deal ends years of speculation as to what would happen with that stake, and puts the streaming service firmly in the hands of Disney.
Details: The two companies had a 2019 agreement that gave both sides an option to trigger this deal, which gave Hulu a total value of at least $27.5 billion.
- Comcast exercised its option on Wednesday under that 2019 put/call agreement.
What's next: Disney said it expects to pay an initial $8.61 billion to Comcast's NBCUniversal division by Dec. 1, which represents the percentage of the floor value for Hulu that the sides agreed upon four years ago.
- Comcast still owed capital call contributions of approximately $567 million under that 2019 agreement, which is why the $8.61 billion represents slightly less than 33% of $27.5 billion.
Yes, but: An appraisal process will be conducted to further assess Hulu's equity fair value. If the value is determined to be higher than the $27.5 billion, Disney will pay its percentage of the difference.
- That process is expected to be completed sometime next year.
- Comcast CEO Brian Roberts has at multiple times argued that Hulu's value is far greater than that floor price.
The big picture: The Hulu deal is one of a number of transactions Disney CEO Bob Iger is pursuing as the company tries to right the ship amid a renewed activist investor campaign.
- Iger has publicly discussed selling off networks, including ABC and FX and is looking for a strategic partner for ESPN.
- Disney is also close to a deal to sell a majority stake in its India business to India-based Reliance Industries.
Go deeper:
What the heck is happening at Disney
Disney's busy week, under Trian's watchful eyes
How the Disney-Comcast-Hulu talks will work
Editor's note: This story has been corrected to state that Disney's initial payment represents the percentage of the floor value for Hulu that the sides agreed upon.
