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Report: Disney Plays the Field, Talking with YouTube

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Disney (s DIS) is finalizing talks to put clips from its properties like ESPN and ABC on YouTube (s GOOG), according to paidContent. But if that wasn’t enough to stir the online video pot, Disney is evidently also in discussions to put full episodes of its content on YouTube in an arrangement that would preclude a similar deal between Disney and Hulu.

The Disney/YouTube clip deal would have content embedded on YouTube’s site using ESPN and Disney video players — not YouTube’s player (similar to what CBS is doing with March Madness). Disney would control the ad inventory, but YouTube woud get some of that to sell on its own. The Disney/YouTube full-episode arrangement would be a pay-for-play deal that would give Disney an immediate payment for having its content run on the site.

Speaking of which, paidContent also picked up a few more nuggets on the Disney/Hulu deal. Disney would be an equal partner with News Corp. (s NWSA) and NBC (s GE), with each having a 30 percent stake in the company, and Disney would commit to marketing the service.

For its part, YouTube is reportedly prepping a new redesign to welcome Disney and other big name content partners. The next iteration of the video site would separate out the premium content wheat from the UGC chaff, something the site needs to do if it wants to create an advertiser-friendly environment.

Though YouTube is the 800 lb. gorilla in the online video world, Hulu is able to monetize more of its content and is growing quickly. This swift kick in the pants is putting the heat on YouTube, which has struggled to effectively earn revenue off its massive audience. Last week Google announced that it was streamlining its Google TV Ads and YouTube ad sales efforts in an attempt to lure in bigger advertisers. Creating a premium content channel would be a step in the right direction to allay advertiser fears of having their brands associated with some of the less desirable content that can be found on YouTube.

And it looks like Disney isn’t the only big name YouTube is in talks with for this premium content channel. The New York Times reported yesterday that Time Warner has approached YouTube about distributing episodes from the likes of TBS and TNT. YouTube already carries content from CBS, Lionsgate and MGM.

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