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In Hulu’s Future, There Will Be Less Broadcast TV

Fox deal with Netflix for ‘New Girl’ past seasons points to likelihood that Hulu will lose rights to more primetime content

Regardless of who ends up owning Hulu, the Internet TV company’s viewers will be seeing less of Zooey Deschanel in Fox’s “New Girl” — and most likely a lot less of the most popular primetime broadcast series.

On Monday, Netflix began offering all 24 episodes of the first season of “New Girl” to U.S. streaming subscribers, under multiyear pact with Twentieth Century Fox Television with exclusivity for online distribution. Netflix will have full access to second season of the popular comedy when the third run of “New Girl” bows in September.

Under Fox’s deal with Netflix, Hulu will no longer have rights to full seasons of “New Girl” on Hulu or the Hulu Plus subscription service. Instead, Hulu and Hulu Plus will provide the five most recently aired episodes.

New episodes will be available to Hulu Plus subs and customers of Fox’s pay TV partners the day after after, with those coming to the free Hulu service after eight days. Fox implemented the authentication change of new episodes in the fall of 2011; pay TV partners currently include Dish Network, Verizon FiOS, AT&T U-verse and seven smaller operators. For “New Girl,” starting with the fall season, Hulu will have a rotating mix of only five episodes from seasons 1 and 2 at any given time.

Walt Disney Co. and 21st Century Fox, two of Hulu’s owners along with Comcast, have solicited bids for the company and are seeking at least $1 billion, with content rights a key piece of the negotiations. Originally binding bids were due last week, but the deadline was extended to July 5.

SEE ALSO: Yahoo Unlikely to Stay in Hulu Bidding

Entities expected in the final round of Hulu bidding include DirecTV, Guggenheim Partners, Silver Lake with WME, Time Warner Cable, KKR & Co.,  and the Chernin Group with AT&T.

Under the sale terms, 21st Century Fox (newly split off from News Corp., which retains publishing biz) and Disney are asking for specific licensing restrictions. Those include the right to hold back certain TV episodes from Hulu for 30 days or even pull hit shows off the service entirely for exclusive distribution — conditions described as “onerous” by one party, according to a report by TheWrap.com. A source familiar with the negotiations downplayed the report as spin, claiming bidders have known about the content licensing terms for some time.

The very reason Disney/ABC and Fox want to exit Hulu is because they see Hulu’s mission as divergent with their goal of extracting as much money as possible from their TV programming through a variety of licensing and distribution deals.

In any case, this week’s Fox-Netflix deal clearly demonstrates that Fox, at least, is looking to shop around high-value TV properties to Hulu’s detriment.

If Fox, ABC and NBC move to curtail access to top TV shows on Hulu, that would obviously weaken the website’s appeal. Hulu has added several exclusive and original series, but the bulk of its viewing remains first-run broadcast TV shows.

Moreover, if the media companies cut more exclusive deals with the likes of Netflix for past seasons of popular programming, that will dilute the value proposition of the $7.99-per-month Hulu Plus premium service, which has more than 4 million subscribers.

SEE ALSO: Hulu’s Executive Exodus Accelerates

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