Disney joins the Hulu partnership

Walt Disney Co. agreed Thursday to join News Corp., NBC Universal and Providence Equity as a joint venture partner of online video site Hulu.

Disney will offer full-length episodes of its most popular prime-time shows from its ABC network, including “Lost,” “Grey’s Anatomy” and “Desperate Housewives,” as well as such cable offerings as ABC Family’s “The Secret Life of the American Teenager” and Disney Channel’s “Wizards of Waverly Place.”

It will also provide older episodes from ABC’s library, such as “Who Wants to Be a Millionaire” and “Dancing With the Stars.”

“From our landmark iTunes deal to our pioneering decision to stream ad-supported shows on our ABC.com player, Disney has sought to meet the constantly evolving viewing habits of our consumers,” said Robert A. Iger, Disney’s president and chief executive. “Today’s Hulu announcement is the next extremely important step in that ongoing journey.”

Disney views the move as a way to reach a new audience that isn’t coming to the network’s own website. Although the ABC.com website has attracted regular viewers of its shows, Hulu offers the opportunity to tap into a new group of viewers.

Terms of the deal were not disclosed.

Once a regulatory review is completed, Disney will gain three seats on the Hulu board, to be held by Iger; Anne Sweeney, president of Disney/ABC Television Group; and Kevin Mayer, executive vice president of corporate strategy and business development.

“At the end of the day, both Disney and Hulu needed each other,” said Tim Hanlon, managing director of VivaKi Ventures, an investment arm of advertising giant Publicis.

“Disney’s ABC and ESPN have been among the most conservative media companies, but even they recognized that they needed alternative distribution methods,” he said.

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 public.

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 Inc. sites at 42.5 million. CBS sites ranked fifth at 35.4 million monthly viewers.

Disney shares rose $1.13, or 5.4%, to $22.14 after the announcement. GE shares rose 43 cents, or 3.5%, to $12.65, while News Corp. shares rose 20 cents, or 2.2%, to $9.19.

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Associated Press was used in compiling this report.