Disney, Hulu restart talks over ABC shows--report

Fri Mar 27, 2009 8:21pm EDT

*Report by paidContent.org cites unnamed sources

*Disney says no deal reached, no comment on report

*Hulu would offer ABC TV and other Disney shows online

LOS ANGELES, March 27 (Reuters) - The Walt Disney Co (DIS.N) and Hulu.com have restarted talks over offering shows from Disney's ABC television network on the online video distributor owned by NBC Universal and News Corp (NWSA.O), paidContent.org reported on Friday, citing unnamed sources.

The talks were described as "serious" by the sources and said to center on ABC prime time shows like "Desperate Housewives," "Lost," and "Ugly Betty." Other content from Disney's cable networks, such as ESPN and Disney Channel, were also being considered, the sources said.

Disney was said to be interested in an equity stake in Hulu similar to the equal ownership stakes, of 45 percent each, held by General Electric Co's (GE.N) NBC Universal and News Corp.

A Disney spokeswoman would not comment on the paidContent report but cautioned that no deal had been reached with Hulu.

A Hulu spokeswoman could not be reached for comment.

Disney has long been in talks with Hulu and other Web-based content distributors as it tries to expand viewership of the ad-supported ABC shows offered on ABC.com and Web sites of its local TV affiliates, on AOL.com, and Comcast Corp's (CMCSA.O) Fancast site.

ABC was the first major broadcast network to offer prime time programming online, and Disney reported last month that its Web-based video player has streamed more than 106 million episodes since the TV viewing season began last September.

Disney also sells movies and TV episodes on Apple Inc's (AAPL.O) iTunes.

Disney has said it is seeking online partners that are "comparable and complementary" to Disney-ABC TV brands, and are able to make "significant" commitments to marketing the shows.

Prospective partners must have a "positive" and strong relationship with their consumers, a sound growth strategy and be able to protect content from piracy, the company said.

A report by consumer technology researcher The Diffusion Group underscores the growing importance of the online video category -- finding that 83 percent of adult consumers, or more than 110 million people, watch online video at least one a week.

The report finds that successful business models will embrace an ad-supported video syndication model and that the majority of Internet television programmers will rely on advertising rather than subscriptions for most of their revenue.

The report forecasts that long-form videos, such as TV shows and movies, will total 22.8 billion streams annually, or 4.1 percent of total video streams by 2013, with short-form and user-generated video making up more than 75 percent of the category.

Ad revenue from long-form video is expected to outstrip the other two categories, however, with long-form content accounting for 69 percent of total ad-related revenue by 2013, the report showed. (Reporting by Gina Keating; Editing by Gary Hill)

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