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ABC, Fox, NBC Seize More Control Of Hulu Ad Sales (EXCLUSIVE)

Network owners of Internet vid giant want more say over blurb placement

Hulu’s three TV-focused owners are taking more control of the streaming-video site’s ad sales, another sign of the tension that sometimes flashes between the popular video hub and the media conglomerates that control it.

SEE ALSO: DirecTV Mulling Hulu Bid

As part of a new agreement, ABC, Fox and NBC are to retain control over as much as 90% of ad inventory attached to current-season programming, or new episodes of shows on their network, according to people familiar with the arrangement. One of these people suggested the policy is to go into effect starting with the new TV season this fall. Hulu would retain control of ad sales associated with so-called “library”content, or old shows that once appeared on ABC’s, NBC’s or Fox’s air. The TV nets’ parents – Walt Disney, NBCUniversal and News Corp. – all own stakes in Hulu.

The arrangement is apparently a flip of sorts: Hulu once controlled the majority of ad sales associated with current programs. Indeed, in 2010, Fox’s then-head of ad sales, Jon Nesvig, described a process in which Fox was able to purchase Hulu ad time that it could then sell to its own sponsors.

Now, things have changed. When it comes to ABC, for example, the ABC ad sales team is to become the lead for current series inventory in ABC programs on Hulu, according to a person familiar with the Walt Disney network’s arrangement. Hulu’s sales team will retain control of about 10% of ABC’s current-series inventory with Hulu for inclusion in “run of site” ad packages offered to sponsors, this person said. And Hulu will also represent inventory in older series available on Hulu that may have originally appeared on ABC.

The new control is clearly something ABC and its partners want. During an upfront presentation last week, Geri Wang, ABC’s president of ad sales, touted the new arrangement with Hulu, noting the appeal ABC oversight might have for sponsors looking to place ads with ABC programs appearing across different media venues. One person familiar with the situation said the three networks were increasingly interested in having more control over Hulu ads at a time when viewers are sampling video in new ways and more advertisers are asking for broader packages that include traditional TV as well as digital and mobile streaming.

ABC and NBC said executives were not available for comment. Fox was unable to respond to queries seeking comment.

Hulu expects to retain a “meaningful percentage” of ad inventory on the three networks’ programs, according to a person familiar with the company. Hulu’s ad sales team will still sell the majority of ad inventory across the site’s 470 content partners. A Hulu spokeswoman said executives at the company declined to comment.

Hulu has clashed with one or more of its owners in the past. In 2011, Fox pushed the site to add more commercials to its streams – a maneuver that stood to benefit the News Corp.-owned network but threated to tarnish the sleek aesthetic Hulu built. The site typically runs far fewer commercials in each of its ad breaks than do its TV-network masters.

In 2010, Fox used some of the Hulu inventory it controlled to offer sponsors so-called “make goods,” or ad time given to sponsors when a show falls short of previously promised ratings guarantees. The move had the potential to undercut Hulu’s own ad-sales efforts.

Hulu has been one of the big success stories in online video. At a recent meeting with advertisers in April, executives noted the site crested 4 million monthly premium subscribers in the first quarter, wihle streaming more than 1 billion videos in that period.

The networks’ efforts to wrest more control of the advertising comes as speculation increases that Hulu could be sold. Disney and News Corp. have hired Guggenheim Partners to explore potential options for the site. NBCUniversal cannot be involved in management decisions for Hulu under terms of the U.S. government’s approval mandated when NBCU parent Comcast took a majority stake in the conglom. Time Warner Cable and DirecTV have surfaced as potential Hulu suitors in press reports.

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