Contentinople - Erin Barker - News Bits: What Disney's Hulu Deal Means for CBS, Apple, YouTube, Cable

Written by Erin Barker

Friday, May 1. 2009 at 11:45 AM EDT 4 comments

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Yesterday, Walt Disney Co. (NYSE: DIS) finally announced it is joining NBC Universal and News Corp. (NYSE: NWS) as an equity partner in Hulu LLC , bringing with it primetime shows from ABC Inc. and content from other channels. So what does this mean for CBS Corp. (NYSE: CBS), the only Big Four broadcast network not distributing content through Hulu? And what about Apple Inc. (Nasdaq: AAPL)'s iTunes, YouTube Inc. , and the cable industry?

CBS, which owns Hulu competitor TV.com and also distributes its content through a number of other sites, is now facing tough pressure to join the other three of the Big Four on Hulu.

According to BusinessWeek, Hulu and CBS aren't currently in talks about putting content from CBS or its 50 percent-owned network, The CW, on Hulu, but it's only a matter of time before CBS caves. For his part, Hulu CEO Jason Kilar told paidContent he'd "love to have CBS be a part in terms of their content on Hulu." We bet you would, Jason.

CBS issued this statement in response to the matter:

CBS has long employed open, non-exclusive content partnerships that allow fans across the Internet to engage with our programming in such a way that we control our distribution, sales and profit. We continue to discuss similar arrangements with additional partners as we grow our online audience based on the strength of our content, and the passion of the communities it creates. The company also believes that controlling our own rights for that content—in all media—preserves its value in a multi-platform business system.

Other ripples from the deal:

The deal is obviously a blow to YouTube, which has been unable to get more than a few clips out of Disney during the past few months. According to analysts, this deal pretty much foils YouTube's recent efforts to become a destination for professionally produced content. The Disney-Hulu deal "is not good news for YouTube," James McQuivey, an analyst at Forrester Research, told CNET. "Any hope of creating a professional-content business has probably disappeared."

Despite this, YouTube issued this nonchalant, whatever-I-don't-care-it's-cool statement: "More content coming online in more places is a win for consumers and provides further validation of the growth of the online video market."

According to BusinessWeek, however, the deal "may have even bigger implications" for Apple. As Hulu -- and its free content -- become more popular, iTunes' offer of buying or renting content won't seem quite as wonderful, Gartner analyst Michael McGuire told the publication. "Over time, perhaps the direct-payment model goes away," he says.

There are some companies that could possibly stand to gain from the deal, however. Many are suggesting that Hulu will now go after content from cable networks, which would would allow the site to bring in more ad revenues. This presents a big opportunity for major cable operators -- many of which have already been looking for ways to compete on the Web -- to establish a presence online.

Or will cable companies focus instead on the threat Hulu could pose to their core, paid distribution businesses?

Tags: ABC, Advertising, Apple, CBS, Disney, Fox, Hulu, NBC, TV, Video, YouTube

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News Bits: What Disney's Hulu Deal Means for CBS, Apple, YouTube, Cable
menexis
Rank: Caliph
Friday May 1, 2009 11:58:29 AM

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I don't believe Hulu poses a threat to cable companies but this Disney move was such a big blow to Apple more than anyone else.

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Re: News Bits: What Disney's Hulu Deal Means for CBS, Apple, YouTube, Cable
ErinB
Rank: Caliph
Friday May 1, 2009 12:57:55 PM

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Yeah, I think I agree with you about cable. If anything, this could be an opportunity for them. And it definitely is a big challenge for Apple -- how will iTunes get users to pay for something if Hulu is giving it out for free?

I tend to think YouTube is the most screwed though. Their attempt to become a destination for premium content is bombing.

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Re: News Bits: What Disney's Hulu Deal Means for CBS, Apple, YouTube, Cable
Jeff Baumgartner
Rank: Caliph
Friday May 1, 2009 12:59:05 PM

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At least one cable operator, Comcast, stands to benefit from the Hulu-Disney deal since Fancast already has a deal to distribute Hulu content and Fancast will be central to the MSO's On Demand Online service that will complement its more "traditional" cable TV service. But I'm still curious to see how Time Warner Cable and other MSOs will vet out their respective broadband TV strategies, but seeing Disney play ball with Hulu is a promising sign for them, I think.

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Threat to iTunes and Amazon
Steve Donohue
Rank: Vizier
Friday May 1, 2009 3:34:26 PM

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That's a great point -- the impact that Hulu could have on iTunes. I've found that the more time I spend on Hulu, the less money I spend buying shows on iTunes, or my preferred service, Amazon's Video On Demand store. Now that Hulu offers a high-res option for most of its TV series and movies, its streaming video looks as good as the huge files you have to download from iTunes or Amazon. And sitting through 10 minutes of advertising during an hour-long show like Fox's "Fringe" on Hulu is painless. But I still like the option of being able to buy commercial-free, downloadable (and portable) TV series directly from iTunes or Amazon for $1.99 apiece.

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