ABC to Add Its Shows to Videos on Hulu

Three of the four big broadcast networks now own stakes in Hulu, the popular video Web site.

ABC Enterprises, a unit of the Walt Disney Company, announced Thursday that it would join NBC Universal, which is owned by General Electric and Vivendi, and the News Corporation, owner of Fox, as a partner in the joint venture.

Hulu, which in the last 18 months has become the third most popular video site on the Web, behind YouTube and Fox Interactive Media, displays free, high-quality versions of television shows and movies, supported by advertising. It said it would add ABC shows like “Lost,” “Desperate Housewives” and “Jimmy Kimmel Live” to its online library by late summer, pending regulatory approval.

Anne Sweeney, president of the Disney-ABC Television Group, said that while most of the network’s shows will continue to be available on ABC.com, that site attracts mostly core fans. By distributing them on Hulu, Disney hopes to reach Hulu’s much-larger audience of 42 million visitors a month.

According to people briefed on the terms of the deal, ABC will give Hulu an exclusive license to distribute its shows on Hulu.com and across the Web on Hulu’s partner sites, like MySpace and AOL .com. ABC will also give Hulu around $25 million in marketing credit, which Hulu can use to advertise itself during ABC’s broadcast shows.

In exchange, Disney will take a 28 percent stake in Hulu.com, a little less than the stakes of the joint venture’s founders, NBC Universal and the News Corporation. As part of the deal, NBC and the News Corporation also renewed their commitments to provide their shows exclusively to Hulu for an additional two years.

The deal is a blow to YouTube, owned by Google and by far the largest video site on the Web. It also courted Disney but struck a deal to display only short clips from shows on ABC and ESPN. People familiar with the negotiations said talks between Disney and YouTube broke down over how a deal would be structured, with Disney insisting on owning a stake in any joint venture.

Jeff Zucker, president of NBC Universal and a member of the Hulu board, said the experience on Hulu.com was superior to that on YouTube, for viewers and advertisers.

“Advertisers have made it clear that they want a safe environment unpolluted by videos of cats on skateboards,” Mr. Zucker said. “Couple that with the fact that Hulu has generated a user experience that is second to none. That has made Hulu the pre-eminent video site.”

ABC’s deal with Hulu also isolates CBS, which will be the only major broadcast network without a seat at the Hulu table. In a statement, CBS said it wanted to maintain control over the distribution of its shows online.

CBS has been offered a chance to join the joint venture several times, say people who have followed the continuing discussions, but has always declined. CBS distributes its shows on 300 video sites, including Joost, MSN and AOL. It also withholds some shows from the Web for several days after they are broadcast to ensure that the Web does not cannibalize the more profitable TV-watching audience.

That is a widespread concern among all the television networks and cable and satellite companies, and it is the reason Disney will not make cable shows like “Hannah Montana” available on Hulu. But Peter A. Chernin, president of News Corporation, said the answer was not to withhold material from sites like Hulu.

“The alternative of never making anything available on the Web is just silliness,” he said. “Then the pirates will just make it available for you. ”

Mr. Chernin said cable companies and Hulu were devising ways to identify the subscribers of cable and satellite services when they visit the site, so they can provide access to cable shows.

[the article was originally published at http://www.nytimes.com/2009/05/01/business/media/01hulu.html?_r=1&ref=media]