Disney will immediately assume full operational control of Hulu as part of a deal with minority partner Comcast/NBCU aimed at cementing its streaming strategy.
Under the terms of an agreement announced on Tuesday, Comcast will retain its 33% interest in Hulu for at least five years and continue licensing its NBC shows to the streaming service through 2024, with an option to pull its content after three years.
But with full operational control, Disney will, as Variety reports, “have the latitude to set a new strategic road map for Hulu, including launching the service internationally.”
The sale price for Comcast’s stake would be at least $5.8 billion and could climb once an independent party determines Hulu’s fair market value, the companies said. The potential payout is based on Hulu’s current $27.5 billion valuation.
“We are now able to completely integrate Hulu into our direct-to-consumer business and leverage the full power of The Walt Disney Company’s brands and creative engines to make the service even more compelling and a greater value for consumers,” Disney CEO Bob Iger said in a news release.
According to Deadline, the deal adds “a crucial chess piece in one of the most serious efforts by a traditional media player to take on Netflix.” Hulu is the third pillar in Disney’s streaming strategy, providing more adult-oriented entertainment programming alongside the upcoming Disney Plus service and the ESPN Plus sports package.
While Netflix, with 148 million subscribers around the world, remains the leading streaming service, Hulu grew at a faster rate in the U.S. in its most recent quarter. Iger has said he expects it to reach 40 million subscribers and turn a profit by around 2024.
The deal with Comcast was set in motion in March when Disney secured 60% ownership of Hulu by acquiring the entertainment assets of 21st Century Fox. Last month, AT&T sold its 9.5% stake to Disney and Comcast for $1.43 billion.
“For Comcast, the decision to sell has no doubt been influenced by the company’s debt load, which swelled at the end of 2018 after the $40 billion acquisition of Sky,” Deadline said.