Disney Takes Full Control of Hulu in Deal with Comcast

The Hulu 2013 Summer TCA Tour takes place at The Beverly Hilton Hotel

"Hulu is the third leg of Disney's streaming strategy", said Trip Miller, a Disney shareholder and managing partner at Gullane Capital Partners.

In five years, Comcast can either sell its Hulu stake for at least $27.5 billion or at whatever value Hulu is appraised for at that point.

Disney, which is trying to challenge the dominance of Netflix in a competitive streaming landscape, is preparing to launch its own streaming service called Disney+ on November 12 and the control of Hulu would add weight to the company's goals.

Disney shares rose as much as 1.7% in NY trading, and Comcast gained as much as 1.9%.

The transaction, leaving Hulu run by just one media company for the first time, marks the end of one of the most complicated ownership sagas in entertainment. NBC and Fox founded Hulu more than a decade ago as a way for TV viewers to watch last night's TV online.

What happens in 2024 will be the real kicker for Hulu (and Disney). Netflix now has a market capitalization of $152 billion, 10 times Hulu's most recent valuation. Don't expect Hulu to suddenly be stripped for parts by Disney though as the streaming service has value on its own. But while Disney+ will host content from brands like Marvel, Star Wars, Pixar, and more, it won't be the right platform for all content.

An aftereffect of all these new services could be the fragmentation of content.

"I don't see FX in Disney+ at all", Landgraf said at a press briefing featuring presentations from the heads of most of Disney's TV networks. AT&T CEO Randall Stephenson said at an investors conference Tuesday that the company, which owns "Friends", will be "bringing a lot of these media rights, licensing rights back to ourselves" for its streaming service.

"It's a good hedge in terms of them being able to gauge whether their own service needs its content", Sappington said. In addition to the agreement, Comcast has agreed to extend their license of NBCUniversal content on Hulu and Hulu Live for their channels until late 2024.

AT&T's sale valued the unprofitable Hulu at $15 billion. That's when the put/call deal can effectively make Disney buy Comcast's interest in Hulu, while Disney can require Comcast to sell at fair market value - a minimum of $27.5B.