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Disney joins NBC and News Corp. with Hulu stake
2009-05-01
LOS ANGELES - Disney movies and ABC TV shows will be available on Hulu.com now that Walt Disney Co. is taking an equity stake in the popular video streaming site, joining its founders, NBC Universal and News Corp. The deal announced Thursday will bring older Disney movies to the site, along with ABC and Disney Channel shows such as "Lost," "Grey's Anatomy" and "Wizards of Waverly Place" after they run on TV. Disney hopes to gain new online viewers that it does not already capture on ABC.com and pick up new income from sharing ad revenue on Hulu. The new setup also brings the owners of three of the four major broadcast networks -- ABC, NBC and Fox -- into a fight for online eyeballs against the video streaming site TV.com, which CBS Corp. acquired last year when it bought CNet Networks Inc. for $1.8 billion. In February, Hulu pulled all its content from TV.com. Another rival is Google Inc.'s YouTube, which is trying to become more than a repository for clips uploaded by the general public. It recently launched a "Shows" section with older movies and TV episodes from partners Sony Corp., Lions Gate Entertainment Corp., CBS Corp., Metro-Goldwyn-Mayer Inc. and Liberty Media Corp. Disney has a deal to provide short-form ESPN and ABC content to YouTube. But in general, ABC, NBC and Fox now will be pitting their premium material against YouTube. "It's an extremely big blow to YouTube," said Gartner Inc. research vice president Allen Weiner. Hulu ranks as the No. 4 online video site in the U.S., with 41.6 million viewers of its videos in March, according to tracking firm comScore. That placed it behind Google sites, including YouTube, at 100.3 million; News Corp.'s Fox Interactive Media, which includes MySpace, at 55.2 million; and Yahoo sites at 42.5 million. CBS sites ranked fifth at 35.4 million monthly viewers. Disney's biggest contribution to Hulu will be its content, but the company will also make a cash investment similar to the amount that General Electric Co.'s NBC Universal and News Corp.'s Fox each contributed in March 2007, according to people knowledgeable about the deal, who spoke on condition of anonymity because the terms were confidential. It is unclear how much Disney paid, but Disney, News Corp. and NBC will all have similar-sized stakes at just over 25 percent. Disney Chief Executive Robert Iger, Disney/ABC Television Group President Anne Sweeney and Kevin Mayer, a Disney senior vice president, will join Hulu's board. Fox and NBC also have three representatives on the 12-member board. Disney's money will fund advertising for Hulu on Disney properties, said one of the people with knowledge of the deal. Fox's and NBC's investments went for similar purposes. During the Super Bowl in February on NBC, Hulu paid for an alien-inspired ad starring Alec Baldwin. In October 2007, Providence Equity Partners invested $100 million for a partial stake that valued Hulu at $1 billion. Hulu employees also own an equity stake. Hulu's latest valuation after Disney's investment is unclear. Disney shares rose $1.13, or 5.4 percent, to $22.14 after the announcement. GE shares rose 43 cents, or 3.5 percent, to $12.65, while News Corp. shares rose 20 cents, or 2.2 percent, to $9.19. CBS shares rose 72 cents, or 11.3 percent, to $7.07, while Google shares were up $5.53, or 1.4 percent, to $397.
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