In addition to the put/call deal, Comcast has agreed with Hulu to extend the Hulu license for NBCUniversal content and the Hulu Live transport agreement for NBCUniversal channels until the end of 2024 and to distribute Hulu on its Xfinity X1 platform. NBCUniversal may terminate most of its content licensing agreements with Hulu in three years, and in one year, NBCUniversal will have the right to display certain content it currently licenses exclusively to Hulu on its own OTT service in order to reduce the royalties Hulu pays. Comcast has agreed to renew the Hulu license for NBCU content and the transport agreement for Hulu`s live TV service for NBCU channels until the end of 2024, and to distribute Hulu on its Xfinity X1 platform. Comcast plans to integrate Hulu`s SVOD service with X1 and Flex, which is available to customers with a Hulu subscription, by late 2019 or early 2020. Still, Moffett wonders if the network affiliation deal being drafted could prove the wild card and push the idea of an early release, given Comcast`s position as the industry`s largest video distributor. Disney and Comcast struck a deal in 2019 that would require Comcast to sell its stake in the streaming service in 2024 for at least $27.5 billion. The deal came after Walt Disney Company bought 20th Century Fox and increased its stake in the streaming service to 60 percent. With another deal reached to buy WarnerMedias 10%, which allowed Disney to own 66% of Hulu. “We are very pleased to have entered into this comprehensive agreement with Disney to continue to provide Xfinity customers with access to their content through our industry-leading platforms,” said Rebecca Heap, senior vice president of consumer products and proposals at Comcast Cable. Two TV Goliaths — Walt Disney Co. and Comcast Corp.
— have entered into a new multi-year distribution agreement that keeps Disney`s television networks, including ESPN, available to customers of comcast`s Xfinity TV cable. As part of the deal, Comcast`s NBCUniversal will continue to license content to Hulu until the end of 2024. Starting next year, however, NBCU will have the right to withdraw programs previously licensed exclusively to Hulu (and continue to make them available to Hulu on a non-exclusive basis for a reduced royalty). And by 2022, NBCUniversal will have the right to terminate most of its content licensing agreements with Hulu. NBCU plans to launch a free, ad-supported streaming service for pay-TV subscribers. Disney and Comcast have agreed to fund the recent purchase of AT&T Inc.`s 9.5% stake. in Hulu, in proportion to their current two-thirds/one-thirds stakes, and in the future, Comcast will have the opportunity, but not the obligation, to fund its proportionate stake in Hulu`s future capital calls and will be diluted, if it decides not to fund. Disney has agreed that only $1.5 billion of a year`s capital calls can be financed by other equity investments, with any capital exceeding that annual amount being financed by non-dilutive debt. Whether or not Comcast funds its stake in these capital requirements, Disney has agreed that Comcast`s stake in Hulu will never be less than 21%, so Comcast is guaranteed at least $5.8 billion under the put/call deal. How much remains to be determined. Moffett suggests that Hulu`s total value is somewhere in the $57 billion range, bringing the value of its SVoD business to $47 billion and its live-tv assets, which face the same pressures as other pay-TV providers, to about $10 billion.
If it`s in the stadium, it would bring Hulu`s value well beyond the $27.5 billion total provided for in Comcast`s current deal with Disney, and allow Comcast to wipe out about $15 billion after taxes, the analyst said. “We strongly believe in the direct-to-consumer space and our content is a key driver of this ecosystem,” 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 in programming and distribution to our own direct-to-consumer platform as we build this business. Significantly, this transaction also confirms the value of our investment, paves the way for liquidity and secures our continued equity stake in Hulu`s success. The Walt Disney Company and Comcast Corporation announced today that Disney will take full operational control of Hulu effective today, in exchange for Disney and Comcast entering into a “put/call” agreement for NBCUniversal`s 33% stake in Hulu. .