This story was written by Staci D. Kramer.
The serious talks between The Walt Disney (NYSE: DIS) Company and Hulu we first reported a month ago finally have resulted in a deal making the company a partner with News Corp., NBC Universal (NYSE: GE) and Providence Equity Partners in the video portal and distributor. The deal, which has yet to close, adds ABC's prime time shows to Hulu as well as its daytime soaps and programming from ABC Family, Disney Channel and SOAPnet.
For Hulu, this is about more than getting ABC and Disney cable programming. To get ABC Disney on board, paidContent was told News Corp (NYSE: NWS). and NBCUwhose exclusive deals with the JV were set to expire late this yearagreed to a two-year extension that matches Disney's term and gives Hulu some breathing space as it continues to build out.
Disney gets three seats on the Hulu board that will be filled by Bob Iger; Anne Sweeney, co-chair, Disney Media Networks and president, Disney/ABC Television Group; and Kevin Mayer, executive vice president, Corporate Strategy, Business Development & Technology. Iger wanted the deal but I'm told Mayer was a big reason why it got done. More details from my own reporting after the jump, along with the full press release.
Here are some other details you won't see in the press release:
Equity: The split comes down to 27 percent for each of the three for a total of 81 percent, according to one source. The remaining
13 19 percent goes to investor Providence Equity Partners and Hulu employees. (I failed to include the employee share last time I wrote about this.) Another source says not to get too hung up on the numbers but to focus on the equal governance rights and equal; responsibilities.
Exclusivity: NBC and Fox exclusivity was in the sunset phase; matching ABC's two-year agreement means Hulu will be the exclusive off-network distributor for all three through the next two years.
Windowing: Tricky, tricky, tricky. One person familiar with the situation told me that the networks will not have to make all the episodes they put on their own sites available to Hulu. For instance, ABC might put the trailing five episodes of Grey's and scattered back episodes on Hulu but could continue to make the whole library available on ABC.com through the ABC player. Update: Another source close to the negotiations said this is wrong and that the level playing field remains: if the network site has it, Hulu has it.
Click through: Currently, Hulu.com doesn't systematically push traffic to the network sites. My understanding is that would change and viewers would be offered the opportunity to click through for more in-depth content at ABC.com or the others.
Distribution: The deal should keep in place the rights of each content partner to continue to work with current partners. Fancast, for instance, has deals with ABC and Hulu; my understanding is ABC could continue to work directly with Fancast even if the Comcast (NSDQ: CMCSA) portal fails to renew its agreement with Hulu.
DISNEY TO JOIN NBC UNIVERSAL, NEWS CORPORATION AND
PROVIDENCE EQUITY PARTNERS AS AN EQUITY OWNER OF HULU
Full Episodes of Hit Current and Library Programs Like Lost, Desperate Housewives,
Grey's Anatomy, Dancing with the Stars, Ugly Betty, Private Practice, Scrubs,
Wizards of Waverly Place, Who Wants To Be A Millionaire, General Hospital, The View, Greek, The Secret Life of the American Teenager And Other Hit Series From ABC, ABC Family, Disney Channel and SOAPnet To Come To Hulu.com and Its Distribution Sites
Los Angeles, CA, April 30, 2009 . . . Hulu and The Walt Disney Company today announced that Disney, trough a subsidiary of ABC Enterprises Inc., has agreed to join NBC Universal, News Corporation and Providence Equity Partners as a joint venture partner and equity owner of Hulu, a leading online aggregator of video content. Upon closing, the agreement will enhance Hulu's programming line-up through the expanded online distribution of Disney's most popular current and library primetime series and library feature films. In particular, full-length episodes of hit current and library programs like Lost, Grey's Anatomy, Desperate Housewives, Private Practice, Ugly Betty, Scrubs, Greek, Hope and Faith, Less Than Perfect, Wizards of Waverly Place, Phineas and Ferb, Who Wants To Be A Millionaire, General Hospital, The View and The Secret Life of the American Teenager will soon be streamed on Hulu on an ad-supported basis.
"From our landmark iTunes deal to our pioneering decision to stream ad supported shows on our ABC.com player, Disney has sought to meet the constantly evolving viewing habits of our consumers, and today's Hulu announcement is the next important step in that ongoing journey," said Robert A. Iger, president and CEO, The Walt Disney Company. "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."
"We're honored to welcome the Disney team in our mission to help people find and enjoy the world's premium content, when, where and how they want it," said Jason Kilar, CEO of Hulu. "With the addition of shows like Lost, Desperate Housewives, Grey's Anatomy and many more to Hulu, we continue to aspire to deliver a service that users, advertisers and content owners unabashedly love."
Following the closing, content available to Hulu users will include:
Full-length episodes of ABC primetime programs like Lost, Grey's Anatomy, Desperate Housewives, Ugly Betty, Samantha Who?, Scrubs, Private Practice and popular late night talk show Jimmy Kimmel Live
Full-length episodes of hit ABC Family series like The Secret Life of the American Teenager and Greek
Popular series from ABC Daytime and SOAPnet like General Hospital and The View
Classic series from ABC's library like Hope and Faith, Less Than Perfect, Commander in Chief, Who Wants To Be A Millionaire and Dancing with the Stars
Select hit programs from Disney Channel like Wizards of Waverly Place and Phineas and Ferb which can be easily accessed from a new DISNEY location in the Channel section of Hulu.com
Popular library titles from The Walt Disney Studios
Short-form content including webisodes, sneak peeks and episode recaps from ABC Entertainment, ABC Family and SOAPnet
"Hulu, quite simply, now has the best premium content on the web," said Peter Chernin, president and COO, News Corporation. "With three major networks and over 150 leading content providers providing content, combined with the best video user interface anywhere on the web, Hulu offers consumers the finest premium online video experience available today."
"Hulu has shown that if you make quality content available on the web and combine it with an unbeatable user experience, viewers will come, and so will advertisers," said Jeff Zucker, president and CEO, NBC Universal. "The addition of some of the best content Disney/ABC has to offer will only enhance Hulu's standing as a top site for high quality video entertainment."
Jonathan M. Nelson, CEO of Providence, said "Hulu is creating significant value for users, advertisers and content owners. This balance, together with aggregated professional content and an expanding base of over 200 brand advertisers, is establishing Hulu as a compelling online video monetization platform. Hulu is a bright spot n the new media landscape."
The transaction is subject to customary closing conditions, including regulatory review. As an equity partner, Disney will have three seats on the Hulu Board that will be held by Mr. Iger; Anne Sweeney, co-chair, Disney Media Networks and president, Disney/ABC Television Group; and Kevin Mayer, executive vice president, Corporate Strategy, Business Development & Technology. All other current directors from News Corp, NBC Universal and Providence will remain on the Hulu board.
By Staci D. Kramer
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