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Disney Jumps Into Hulu Hoop

The Walt Disney Co., as had been rumored, announced it will take an equity stake in Hulu, the Internet TV venture formed by NBC Universal and News Corp., and also will supply a wealth of full-length episodes from ABC and Disney properties to the site.

Financial terms of the deal were not disclosed. However, sources familiar with the transaction said that Disney has "basic equity parity with Fox and NBC." A report in The Wall Street Journal put Disney's stake at close to 30%. With  NBCU and News Corp. holding similar positions, the remainder is owned by Providence Equity Partners and Hulu employees. Hulu had previously confirmed a $100 million investment from Providence.

Disney will provide current and library primetime series and theatricals, with shows that include: ABC's Lost, Grey's Anatomy, Desperate Housewives, Private Practice, Ugly Betty, Scrubsand General Hospital; Disney Channel's Wizards of Waverly Place and Phineas and Ferb; and ABC Family's Greek and The Secret Life of the American Teenager.

However, Disney will not provide some of its most popular cable programming, such as the High School Musical movies and Hannah Montana. According to the Journal report, Disney is withholding that content from Hulu to protect its relationship with cable operators.

Hulu was the third-largest Internet video site in terms of number of views for March, delivering 380 million views to 41.6 million unique users, according to research firm comScore. The overlap between ABC.com and Hulu appears to be minimal: About 8% of ABC.com users also visit Hulu while only 13% of the Hulu audience comes to ABC.com, according to comScore figures supplied by Disney.

"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, and today's Hulu announcement is the next important step in that ongoing journey," Disney president and CEO Bob Iger said in a statement. "Disney and Hulu share a focus on delivering the highest-quality entertainment experience and we look forward to working with Hulu to build value for our consumers, our brands and our shareholders."

"We're honored to welcome the Disney team in our mission to help people find and enjoy the world's premium content, when, where and how they want it," Hulu CEO Jason Kilar said in announcing the deal. "With the addition of shows like Lost, Desperate Housewives, Grey's Anatomy and many more to Hulu, we continue to aspire to deliver a service that users, advertisers and content owners unabashedly love."

The original Hulu founders also weighed in. Outgoing News Corp. president and COO Peter Chernin said: "With three major networks and over 150 leading content providers providing content, combined with the best video user interface anywhere on the web, Hulu offers consumers the finest premium online video experience available today."

NBCU president and CEO Jeff Zucker added: "Hulu has shown that if you make quality content available on the web and combine it with an unbeatable user experience, viewers will come, and so will advertisers. The addition of some of the best content Disney/ABC has to offer will only enhance Hulu's standing as a top site for high quality video entertainment."

The companies said the Disney investment in Hulu is subject to customary closing conditions, including regulatory review.

As an equity partner, Disney will have three seats on Hulu's board that will be held by Iger; Anne Sweeney, co-chair, Disney Media Networks and president, Disney/ABC Television Group; and Kevin Mayer, Disney executive vice president of corporate strategy, business development and technology. All other current directors from News Corp, NBC Universal and Providence will remain on the Hulu board.

Founded in March 2007, Hulu is based in Los Angeles with offices in New York, Chicago and Beijing.