Disney buys stake in Hulu
Desperate Housewives, Lost to stream on site
By Jennifer Netherby -- Video Business, 4/30/2009
APRIL 30 | DIGITAL: After weeks of speculation, The Walt Disney Company announced today that it has bought an equity stake in online video site Hulu and will add its TV shows and movies from Walt Disney Studios to the site.
Disney, which made the deal through subsidiary ABC Enterprises Inc., joins News Corp., NBC Universal and Providence Equity Partners as an equity partner in the fast-growing TV and movie-streaming site. Terms of the deal, which is still subject to regulatory approval, were not announced. Disney will have near parity with News Corp. and NBC, according to an industry source. Other sites have reported it would take a stake between 27% and 30%, which the source said is within the realm of possibility.
Once the deal closes, Hulu will begin streaming current ABC hits Lost, Grey’s Anatomy, Ugly Betty, Desperate Housewives and other current shows the day after they air on TV, mirroring Disney's streaming strategy on ABC.com and other Disney sites. Disney also offers streams of its shows through distribution partners AOL, Fancast and Xbox Live, which it will continue to do. Hulu, along with Disney and its partners, will get an exclusive window for Disney content.
In addition to ABC primetime shows, Disney will also offer other current and library shows from ABC Daytime, ABC Family, the Disney Channel as well as “popular titles” from Walt Disney Studios to the site. The company hasn’t yet said what movies will be added.
Once Disney content is added, Hulu will have TV shows from three of the four major networks. CBS doesn't have a distribution deal with Hulu and streams its content at rival site TV.com, which it owns.
In statements announcing the deal, top execs with Hulu, News Corp and NBC Universal said the addition of ABC programming would help drive even more viewers to Hulu.
Hulu became the third most popular video streaming site online in March, streaming 380 million videos, a 14% jump from the previous month, according to the latest Comscore numbers. Disney Online streamed 125 million videos during the month.
Disney cited Comscore numbers that show the sites serve two different audiences, with ABC.com and other Disney sites serving core fans and Hulu serving more casual ABC viewers. Just 13% of visitors to Hulu go to ABC.com or other Disney sites to watch videos while 8% of Disney online viewers go to Hulu.
Disney was the first network to begin streaming TV shows more than two years ago. The studio also sells its shows online as downloads through iTunes and CinemaNow.
"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," Disney president and CEO Robert Iger said in a statement announcing the deal.
For its equity stake, Disney will receive three seats on the Hulu board to be held by Iger, co-chair of Disney Media Networks and president of Disney/ABC Television Group Anne Sweeney, and executive VP of corporate strategy and business development and technology Kevin Mayer.
Hulu CEO Jason Kilar said the addition of ABC content Hulu will “continue to aspire to deliver a service that users, advertisers and content owners unabashedly love.”
In a blog post on Hulu.com, he called Disney a cultural fit with Hulu.
