News Disney and Fox come to terms -- announcement soon; huge IP acquisition

[Rodan75]

Hopefully its true and gets announced within the next week or so.

We may just be in an echo chamber triggered by the MarketWatch alert. I tend to think a deal will/has happened, but Disney doesn’t normally let stuff slip.

Although both Iger and Roberts were both being cute on their analyst calls, which is the only thing having me lean into a deal being close/done.

 

[seascape]

We may just be in an echo chamber triggered by the MarketWatch alert. I tend to think a deal will/has happened, but Disney doesn’t normally let stuff slip.

Although both Iger and Roberts were both being cute on their analyst calls, which is the only thing having me lean into a deal being close/done.

Comcast is not close to Disney on keeping things private, especially if part of the deal includes NBC Universal assets. Comcast is a more diverse corporation and not tightly managed.

 

[Rodan75]

Comcast is not close to Disney on keeping things private, especially if part of the deal includes NBC Universal assets. Comcast is a more diverse corporation and not tightly managed.

Good point. Comcast seems to be a flowing hose of information.

 

[AnotherDayAnotherDollar]

Spielberg already is tied indefinitely to Universal as they have ownership in Amblin now.

Good point.

We may just be in an echo chamber triggered by the MarketWatch alert. I tend to think a deal will/has happened, but Disney doesn’t normally let stuff slip.

Although both Iger and Roberts were both being cute on their analyst calls, which is the only thing having me lean into a deal being close/done.

That tweet points back to the tweet I mentioned in an earlier post. I wouldn't pay any attention to it.

 

[bartholomr4]

Very informative article / interview with Randy Freer the CEO of Hulu.... Lots of questions asked on this thread, answered.. Especially informative is the discussion about international expansion....

Hulu CEO Randy Freer explains why Hulu never promoted its ad-free version

The more expensive Hulu No Commercials plan was announced in 2015, and almost four years later, the company is finally ready to start advertising that it exists.

www.vox.com

 

[bartholomr4]

https://www.cnbc.com/2019/05/14/comcast-has-agreed-to-sell-its-stake-in-hulu-in-5-years.html?__source=yahoo|finance|headline|story|&par=yahoo&yptr=yahoo

Five year deal with Comcast to sell Hulu, with Disney Now in Full Control

BURBANK, Calif. & PHILADELPHIA--(BUSINESS WIRE)--

The Walt Disney Company (DIS) and Comcast Corporation (CMCSA) announced today that Disney will assume full operational control of Hulu, effective immediately, in return for Disney and Comcast entering into a “put/call” agreement regarding NBCUniversal’s 33% ownership interest in Hulu. Under the put/call agreement, as early as January 2024, Comcast can require Disney to buy NBCUniversal’s interest in Hulu and Disney can require NBCUniversal to sell that interest to Disney for its fair market value at that future time. Hulu’s fair market value will be assessed by independent experts but Disney has guaranteed a sale price for Comcast that represents a minimum total equity value of Hulu at that time of $27.5 billion.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190514005500/en/

Disney and Comcast have agreed to fund Hulu’s recent purchase of AT&T Inc.’s 9.5% interest in Hulu, pro rata to their current two thirds/one third ownership interests and, going forward, Comcast will have the option but not the obligation to fund its proportionate share of Hulu’s future capital calls and will be diluted if it elects not to fund. Disney has agreed that only $1.5 billion of any year’s capital calls can be funded through further equity investments with any capital in excess of that annual amount being funded by non-diluting debt. Whether Comcast funds its share of those equity capital calls or not, Disney has agreed that Comcast’s ownership interest in Hulu will never be less than 21% such that Comcast is guaranteed to receive at least $5.8 billion under the put/call agreement.

In addition to the put/call agreement, Comcast has agreed with Hulu to extend the Hulu license of NBCUniversal content and the Hulu Live carriage agreement for NBCUniversal channels until late 2024 and to distribute Hulu on its Xfinity X1 platform. NBCUniversal can terminate most of its content license agreements with Hulu in three years’ time, and in one year’s time NBCUniversal will have the right to exhibit on its own OTT service certain content that it currently licenses exclusively to Hulu in return for reducing the license fee payable by Hulu.

 

[seascape]

https://www.cnbc.com/2019/05/14/com...|finance|headline|story|&par=yahoo&yptr=yahoo

Five year deal with Comcast to sell Hulu, with Disney Now in Full Control

This is a good deal for both sides. Disney will get 100% ownership in 2024, the year it is expected to become profitable. Comcast gets to see it's investment increase in value without having to fund the Hulu deficit. If Comcast continues to invest they can keep their 1/3 ownership otherwise it can decrease to 21%.

There is no other reporting on if anything else is included in the deal but Disney gets 100% control immediately and will be able to take Hulu international and possibly add more levels to the Hulu service. There is nothing that would prevent Hulu from offering different tiers of OTT service from a limited service to a full blown service that competes with the full cable tv package.

 

[happycamperuni]

Yeah, gonna echo that this is a great deal for both sides. Operationally, Disney needed immediate control for international expansion alongside Disney+ so they can immediately start rolling both out and bundling worldwide.

Comcast gets to keep selling content to Hulu while locking in a future price and sale arrangement while being able to choose whether to continue to fund Hulu's on-going losses.


Basically, this is good outcome.

 

[KrazyKat]

So Disney and Comcast are playing nice?

Hmmmmmmm

 

[AnotherDayAnotherDollar]

This is a good deal for both sides. Disney will get 100% ownership in 2024, the year it is expected to become profitable. Comcast gets to see it's investment increase in value without having to fund the Hulu deficit. If Comcast continues to invest they can keep their 1/3 ownership otherwise it can decrease to 21%.

There is no other reporting on if anything else is included in the deal but Disney gets 100% control immediately and will be able to take Hulu international and possibly add more levels to the Hulu service. There is nothing that would prevent Hulu from offering different tiers of OTT service from a limited service to a full blown service that competes with the full cable tv package.

Seems like there's nothing else included. The dream is dead.

That said it's still a good outcome for both parties.

 

[ToTBellHop]

So Disney and Comcast are playing nice?

Hmmmmmmm

The Spider-Man ride at Animal Kingdom begins construction this afternoon.

 

[KrazyKat]

FINALLY!

 

[juniorthomas]

Nope.

Yup.

 

[seascape]

The Spider-Man ride at Animal Kingdom begins construction this afternoon.

Don't go there. Let Universal keep their limited Marvel rights in Orlando and be happy with all the Marvel rides we will get at WDW based on other characters.

 

[bartholomr4]

So Disney and Comcast are playing nice?

Hmmmmmmm

The agreement ends with the purchase in January 2024, so its basically 3 years before Disney owns it all.

With the maximum annual equity contribution of $1.5 billion a year, that means the maximum Comcast will contribute is $500 million a year, and $1.5 Billion over three year. So 1/3rd of the $27.5 valuation, = $9.16 billion, minus $1.5 investment, = $7.67 Billion for something which is worth $4.5 Billion today. It appears by spreading the investment and assumptions around growth, Comcast would plan not to contribute these amounts, and the Disney equity could rise to 79.9%. If this happens Comcast gets $5.78 Billion.

Operational control for Disney means a great deal. Disney can migrate Hulu to the Disney+ BamTech infrastructure. International becomes possible, but there are lots of barriers and costs associated with that expansion (See the link to the interview with the Hulu CEO on the prior page). It can incorporate / consolidate operational savings and advertising synergies. It can also load up Hulu's balance sheet with debt to pay for all of this expansion, which would "water down" the value of Hulu, so the odds that Hulu would be worth more than $27.5 Billion in 3 years to me is pretty low. Disney gets the NBCU content for 3 years, and Hulu on Xfinity for the same duration. The NBCU content becomes cheaper if Comcast decides to place it on it's streaming service, so cost savings.

 

[Quinnmac000]

I do find this wording interesting...

Under the put/call agreement, as early as January 2024, Comcast can require Disney to buy NBCUniversal’s interest in Hulu and Disney can require NBCUniversal to sell that interest to Disney for its fair market value at that future time.

It keeps the door open for both to maintain an investment in Hulu longer than anticipated if both mutally agree.

 

[bartholomr4]

I do find this wording interesting...



It keeps the door open for both to maintain an investment in Hulu longer than anticipated if both mutally agree.

Yes, Disney holds a Call Option, which it can exercise in January 2024 to Force Comcast to sell, and Comcast has a Put Option which it can exercise in January 2024 to force Disney to buy. With another agreement, anything is possible....

 

[Quinnmac000]

The agreement ends with the purchase in January 2024, so its basically 3 years before Disney owns it all.

With the maximum annual equity contribution of $1.5 billion a year, that means the maximum Comcast will contribute is $500 million a year, and $1.5 Billion over three year. So 1/3rd of the $27.5 valuation, = $9.16 billion, minus $1.5 investment, = $7.67 Billion for something which is worth $4.5 Billion today. It appears by spreading the investment and assumptions around growth, Comcast would plan not to contribute these amounts, and the Disney equity could rise to 79.9%. If this happens Comcast gets $5.78 Billion.

Operational control for Disney means a great deal. Disney can migrate Hulu to the Disney+ BamTech infrastructure. International becomes possible, but there are lots of barriers and costs associated with that expansion (See the link to the interview with the Hulu CEO on the prior page). It can incorporate / consolidate operational savings and advertising synergies. It can also load up Hulu's balance sheet with debt to pay for all of this expansion, which would "water down" the value of Hulu, so the odds that Hulu would be worth more than $27.5 Billion in 3 years to me is pretty low. Disney gets the NBCU content for 3 years, and Hulu on Xfinity for the same duration. The NBCU content becomes cheaper if Comcast decides to place it on it's streaming service, so cost savings.

There is also another set of key wording the press release is employing....

NBCUniversal can terminate most of its content license agreements with Hulu in three years’ time, and in one year’s time NBCUniversal will have the right to exhibit on its own OTT service certain content that it currently licenses exclusively to Hulu in return for reducing the license fee payable by Hulu.

thats the key word, exclusively. Going through Universal's properties, only 30 Rock and Will and Grace is a Hulu exclusive. So I don't think it really makes it cheaper. The issue with this wording is what is considered exclusive or not. Exclusive domestic or exclusive internationally?

 

[Indy_UK]

So Disney get immediate control of Hulu which means they can take it international and do what they want with the service?

Comcast still owns 30% as long as they invest and if they don't, their share drops?

When we get to 2024, Disney then buys Hulu for the value it's worth at the time of selling?

 

[Quinnmac000]

So Disney get immediate control of Hulu which means they can take it international and do what they want with the service?

Comcast still owns 30% as long as they invest and if they don't, their share drops?

When we get to 2024, Disney then buys Hulu for the value it's worth at the time of selling?

If they don't invest, their position can ONLY dilute to 21% but yes they can still own 30%. And 2024 Disney CAN buy or Comcast CAN force them to buy at the valuation in 5 years.