Disney acquires 25% stake in video site Hulu

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Walt Disney has acquired a stake in Hulu, joining News Corp, NBC Universal and Providence Equity Partners as equity holders in the online video group, which is forecast this year to overtake rival YouTube in terms of US advertising revenue.

The price was not disclosed, but a person familiar with the matter said Disney would take a 25 per cent stake in return for a “modest” cash sum, marketing support and a commitment to supply programming.

The deal marks a turning point in the battle for supremacy in online video because it will significantly strengthen Hulu’s line-up of professional programming.

Its content, which already includes programmes from NBC and Fox Television, will be bolstered by some of the most popular TV shows, with Disney’s ABC network contributing episodes of Grey’s Anatomy, Desperate Housewives and Lost.

News Corp and NBC each own about 27 per cent of Hulu while Providence Equity Partners and Hulu’s management own the rest. Providence acquired a 10 per cent stake in the venture in 2007 for $100m, giving Hulu a provisional value of $1bn.

Jeff Zucker, chief executive of NBC Universal, said it was “premature” to talk about a valuation for Hulu. “It’s still in its infancy,” he said. “Remember, it’s only been around for 18 months . . . but Disney coming on board is more evidence that Hulu is the pre-eminent online video site.”

Disney has been at the forefront of the shift to online viewing, with ABC the first network to strike a deal selling its content on iTunes. ABC was also the first US broadcaster to launch a dedicated online video player screening full episodes of its programmes.

Anne Sweeney, president of the Disney-ABC television group, said the Hulu deal would not affect viewing on ABC.com.

Hulu’s other owners have insisted the site would complement, not replace, traditional TV viewing. But this week Peter Chernin, chief operating officer of News Corp, warned that TV viewing was under threat from the internet.

Ms Sweeney agreed that “repeats no longer work”. But she said the internet had “only been additive” to viewing of new shows. “Viewing this year is actually up . . . we’ve seen no evidence of cannibalisation.”

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