Internet Video

Disney Takes Stake In Hulu Video Site

5/02/2009 2:00 AM Eastern

While The Walt Disney Co. is taking an equity stake in Hulu, the Internet TV venture formed by NBC Universal and News Corp., the entertainment giant for now is still keeping its biggest made-for-cable hits off the Web.

Under the terms of the deal, which had been rumored for months, Disney will supply a wealth of full-length episodes from ABC and Disney Channel properties to the site. The move is a shift in strategy for Disney, which until now has mostly limited Internet-content distribution to sites it controls.

But Disney will not supply its top-rated original movies, such as the High School Musical and Hannah Montana franchises, a signal the programmer doesn't want to roil the waters with cable and other pay TV distributors. In addition, the companies confirmed that no ESPN content is included under the agreement.

Financial terms of the deal were not disclosed. Sources familiar with the transaction said that Disney has “basic equity parity with Fox and NBC.”

The three media companies — NBCU, News Corp. and Disney — now each hold about a 27.5% equity stake in Hulu, according to a report in The Wall Street Journal. The remainder is owned by Providence Equity Partners and Hulu employees. Hulu had previously confirmed a $100 million investment from Providence.

Disney does not yet have a complete list of the content it will offer through Hulu. Current and library primetime series and theatricals expected to be in the mix include: ABC's Lost, Grey's Anatomy, Desperate Housewives, Private Practice, Ugly Betty, Scrubs and General Hospital; Disney Channel's Wizards of Waverly Place and Phineas and Ferb; and ABC Family's Greek and The Secret Life of the American Teenager.

In terms of windowing, Hulu will have access to the ABC content at the same time ABC.com has it (typically early the next morning after it airs on the network).

From the cable networks, the material Disney currently makes available online — and what will be available through Hulu — “doesn't really neatly mirror what is on-air,” according to an executive familiar with the deal. The amount of content from the cable networks will continue to be “much less” than the broadcast content available via ABC.com, this executive added.

In any case, the Disney deal can only reinforce Hulu as the No. 1 destination for premium-TV content.

Hulu in March was the third-largest Internet video site in terms of number of views, delivering 380 million views to 41.6 million unique users, according to research firm ComScore.

“Disney and Hulu share a focus on delivering the highest-quality entertainment experience and we look forward to working with Hulu to build value for our consumers, our brands and our shareholders,” Disney president and CEO Bob Iger said in a statement.

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