Peter Kafka

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Disney Gets Ready–Finally–to Hold Hands With Hulu

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Is a deal between Disney and Hulu, which has been in the works for many months, finally ready for primetime? Yes, say multiple people familiar with the matter who tell me an announcement should be coming in the next few days.

The arrangement will add Disney (DIS) programming–primarily television shows from ABC like “Lost,” although it will also include some of the company’s movies–to the joint venture between GE’s (GE) NBC and News Corp.’s (NWS) Fox. In return for giving Hulu exclusive access to some of its content, but not for some high-profile programming like ESPN, Disney will get an equity stake in the joint venture and seats on the company’s board.

It’s a big deal for Disney, which until now has been focused on driving Web traffic to its own properties. And it’s a big deal for Hulu, which has now locked up three of the four broadcast networks.

Does all of this sound familiar? It should. It’s pretty much where things stood nearly a month ago when I was told a deal was going to be struck “any day.”

So what was the hold-up?

Just the tedium of i-dotting and t-crossing, I’m told. In this case, it comes in the form of haggling over programming decisions: Which shows and movies will appear on Hulu, how quickly they appear after their offline debut, how long they will stay on the site, etc.

A week ago, an executive involved in the negotiations told me the deal was “down to the short strokes.” By the end of last week, the four companies involved were massaging language for press releases, I’m told.

The long gestation period has led some observers to wonder if other players with a stake in online video–like Comcast (CMCSA), Google (GOOG) or CBS (CBS)–had been able to convince Disney’s Bob Iger not to go forward with the pact.

“Everyone’s been trying to tell Iger how stupid this deal is,” a TV executive tells me. The nuance of the critiques differs depending on who’s making them, but all of them make the same point: Throwing in with Hulu will strengthen the joint venture, which also includes investor Providence Equity Partners, but it won’t provide Disney with significant upside.

But the complaints seem to have fallen on deaf ears. While Google was able to get a deal with Disney to run excerpts of some of its programming on YouTube–a consolation prize, basically–it’s been unable to cobble together a deal for long-form programming.

Earlier this month, YouTube unveiled a new Hulu-like section for movies and television shows. But its inventory of TV shows and movies remains paltry and it doesn’t have any of the first-run shows that the TV networks highlight on their own sites (and on Hulu).

One thing to watch for going forward, regardless of when the Disney/ABC deal gets done, is how much access to those first-run shows Hulu users get.

Hulu is a hit with viewers but its network backers are still wary of training viewers to expect to watch their favorite shows on the Web whenever they want to watch them.

Which is why many of Hulu’s first-run TV shows have particularly short shelf lives. You can only see about half of this season’s run of NBC’s “The Office,” for instance. And if you want to watch new episodes of “Rescue Me,” which airs on News Corp.’s FX, you’ve got to be patient, then act fast. New episodes don’t show up on Hulu until eight days after they premiere on the cable channel, but they don’t last there for more than a couple of weeks.

In TV parlance, this now-you-see-it-now-you-don’t programming is called “windowing,” and casual Hulu users tend not to notice or complain about it. A small dust-up in January about “It’s Always Sunny In Philadelphia,” a disappearing FX sitcom, is the exception that proves the rule.

But what happens if NBC, Fox and ABC shows start taking longer to get to the Hulu site and leave sooner? We may find out. An executive at one of the joint venture’s network backers tells me to expect more restrictive windowing in the future as the TV guys try to get a handle on the Web.

Which means that just as the Disney deal pumps more content into Hulu, it may end up becoming harder to find.

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