CBS Nearing a Deal with Hulu for Live-Streaming Service
January 04 2017 - 12:29PM
Dow Jones News
By Shalini Ramachandran
CBS Corp. is nearing a deal to license its broadcast network and
some cable channels for Hulu's forthcoming cable-style,
live-streaming service, people familiar with the matter said.
CBS will bring in more than $3 per monthly subscriber initially
for its channels, with increases over the multiyear deal that could
get to more than $4, the people said, which is more than what it
makes from 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 offers the option for Hulu 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
subscription video-on-demand service to buy Showtime for an
additional $8.99 a month.
The companies are expected to announce the deal Wednesday, the
people said.
Hulu won't be getting full current seasons of popular CBS shows
like "NCIS" on demand, 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.
Hulu has already signed up other major network groups, including
Walt Disney Co., 21st Century Fox and Time Warner Inc., to offer
channels on its live-streaming service, set to be priced around $40
a month and debut in early 2017. The streaming service hopes to
offer a more personalized, intuitive version of cable TV than that
offered by traditional pay-TV distributors and even newer streaming
entrants.
CBS has taken an unorthodox approach to digital distribution and
hasn't been afraid to hold out from the likes of AT&T Inc.'s
DirecTV Now and Dish Network Corp.'s Sling TV, even as its rival
media companies have signed on.
CBS's strategy has been to charge some $2 per monthly subscriber
to its traditional cable and satellite distributors, about $4 for
new live-streaming entrants and $6 for subscribers to its CBS All
Access streaming service. CBS executives have said they are open to
licensing to new entrants so long as the price is right, noting a
recent deal with Alphabet Inc.'s YouTube.
The robustness of CBS All Access has stoked ire among some
distributors, who privately complain that the service is now a
better product than the one CBS sells them. CBS offers full current
seasons of shows like "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
that 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 potential risk to CBS's long-term growth.
CBS executives have brushed off the threat, noting that as the
No. 1 network, CBS's absence would hurt distributors. Plus, a
subscriber to CBS All Access pays roughly three times more than a
traditional pay-TV distributor pays per subscriber.
CBS's pact with Hulu shows that, at least for now, the network
is figuring out 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.
It is also noteworthy that Hulu is owned by CBS's direct rivals:
Disney, Fox, Comcast Corp. and Time Warner.
While the deal means CBS will license its programming for Hulu's
live-streaming service, it doesn't include any additional
programming for Hulu's existing subscription on-demand service,
which costs between $7.99 and $11.99 a month.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
January 04, 2017 12:14 ET (17:14 GMT)
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