Hulu Adds CBS to Its Lineup Ahead of Streaming Launch -- WSJ
January 05 2017 - 3:03AM
Dow Jones News
By Shalini Ramachandran
Hulu struck a deal to license CBS Corp.'s broadcast network and
cable channels for its live-streaming service, bulking up the
lineup for its highly anticipated launch in the coming months.
CBS will receive more than $3 per monthly subscriber for its
channels initially, with its take under the multiyear deal possibly
rising above $4, people familiar with the matter said. Those rates
exceed what it charges traditional pay-TV distributors. The
arrangement includes carriage of CBS Sports Network and Pop, the
pop culture cable channel CBS co-owns with Lions Gate Entertainment
Corp.
The pact also gives Hulu the option to include CBS's Smithsonian
Channel and the CW Network in the future, and allows it to sell
CBS's premium network Showtime as an add-on to the live-streaming
service. Hulu already allows subscribers to its video-on-demand
service to buy Showtime for an additional $8.99 a month.
Hulu Chief Executive Mike Hopkins announced the agreement with
CBS at an investor conference in Las Vegas on Wednesday, confirming
a report by The Wall Street Journal.
Hulu won't be getting on-demand access to full current seasons
of popular CBS shows such as "NCIS," which will remain exclusive to
CBS's own streaming service, CBS All Access, the people said. Hulu
will receive a few recent episodes of such shows to offer on-demand
for customers of the new live service.
Mr. Hopkins also revealed the live-streaming service will cost
"under $40" and include Hulu's existing subscription
video-on-demand library, which on its own costs subscribers $7.99
or $11.99 a month. Hulu's deep library, with full seasons of past
shows such as "Seinfeld," and an existing subscriber base of at
least 12 million could give it a leg up as it competes with other
live-streaming rivals such as AT&T Inc.'s DirecTV Now, Dish
Network Corp.'s Sling TV and Sony Corp.'s PlayStation Vue.
Hulu has already signed up other major network groups, including
Walt Disney Co., 21st Century Fox and Time Warner Inc., and said it
is in talks with Comcast Corp.'s NBCUniversal and other companies.
The streaming service aims to offer a more personalized, intuitive
version of cable TV than that offered by traditional pay-TV
distributors and even newer streaming entrants. At launch, Hulu's
offering will also include a cloud-based digital video recorder and
many local station affiliates.
Getting CBS on board may also help Hulu differentiate its
service. CBS has so far taken an unorthodox approach to digital
distribution and hasn't been afraid to hold out from the likes of
DirecTV Now and Sling TV, even as rival media companies have signed
on.
CBS's strategy has been to charge about $2 per monthly
subscriber to its traditional cable and satellite distributors, $4
for new live-streaming entrants and $6 for subscribers to its CBS
All Access streaming service.
The robustness of CBS All Access has stirred up some
distributors, who privately complain the service is now a better
product than the one CBS sells them. CBS offers full current
seasons of shows such as "NCIS" for on-demand streaming through All
Access, but it holds back those rights from traditional partners
unless they pay much more.
Some distribution executives believe as CBS All Access gains
more subscribers, it becomes easier for them to justify going
without CBS if it demands too high a rate, posing a long-term risk
to CBS. CBS executives have brushed off the threat, noting that as
the No. 1 network, CBS's absence would hurt distributors.
CBS's pact with Hulu shows that at least for now the network is
finding a way to have its cake and eat it, too -- striking deals
with distributors while maintaining a stand-alone streaming service
with some 1.2 million subscribers. Moreover, the deal with Hulu
involves CBS's direct rivals; the streaming service is owned by
Disney, Fox, Comcast and Time Warner.
While Hulu loses money today, Mr. Hopkins said he expects the
service to become profitable over time. Hulu's targeted advertising
capabilities can help it "transform advertising" for traditional
television and make money, he said.
"I don't anticipate us perpetually being in a loss mode."
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
January 05, 2017 02:48 ET (07:48 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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