Updated: The serious talks between The Walt Disney Company and Hulu we first reported a month ago finally have resulted in a deal making the company a partner with News Corp., NBC Universal (NSDQ: CMCSA) and Providence Equity Partners in the video portal and distributor. The deal, which has yet to close, adds ABC’s prime time shows to Hulu as well as its daytime soaps and programming from ABC Family, Disney Channel and SOAPnet.
For Hulu, this is about more than getting ABC and Disney cable programming. To get ABC Disney on board, paidContent was told News Corp (NSDQ: NWS). and NBCU — whose exclusive deals with the JV were set to expire late this year — agreed to a two-year extension that matches Disney’s term and gives Hulu some breathing space as it continues to build out.
The dissension over the move at Disney, which until now has insisted ABC’s long-form programming be streamed through its own player, was tamped down a bit by the emphasis on the low amount of current crossover viewing between ABC.com and Hulu, and the company’s desire to attract more casual viewers. The idea, emphasized by Anne Sweeney, co-chair, Disney Media Networks and president, Disney/ABC Television Group, in an interview, is to aim for the casual fan who wants a browser-based experience through Hulu, possibly converting some along the way, and serve the more dedicated fans through the ABC.com player.
The desire to expand Disney’s reach, audience and potential ad revenue also played a role in the short-form deal with YouTube announced earlier this month; that deal includes ESPN (NYSE: DIS). Why didn’t Disney go with Google’s long-form offer? One source attributed it, in part, to timing and to terms that weren’t seen to outweigh the Hulu potential — in other words, Disney has equity in Hulu and wasn’t going to get anything like that at YouTube (NSDQ: GOOG).
Disney gets three seats on the Hulu board that will be filled by CEO Bob Iger; Sweeney; and Kevin Mayer, executive vice president, Corporate Strategy, Business Development & Technology. Iger wanted the deal but I’m told Mayer was a big reason why it got done. The release is here but read on for details you won’t get from that.