Disney, YouTube Reach Revenue-Sharing Short-Form Content Deal

New ESPN Channel Set To Launch Mid-April

Disney Media Networks and YouTube have reached a "revenue-sharing short-form deal" that covers the "launch of multiple ad-supported U.S.-only channels featuring content from ESPN and the Disney/ABC Television Group," according to Staci Kramer of PAID CONTENT. The ESPN channel is set to launch in mid-April, with the ABC channel starting in mid-May. Sources said that Disney "would control the ad inventory" for the short-form content. The ESPN video player, which will "share DNA with the ABC player, will be integrated into the ESPN channel and 'will anchor a wide variety of exciting sports content and highlights' on YouTube Sports." But some ESPN content "will be available through YouTube's player." While the ESPN channel and player will not contain long-form content, ESPN and ABC "will be able to link back to long-form content on their own sites" (PAIDCONTENT.org, 3/30). In L.A., Dawn Chmielewski notes the deal will "extend the Internet reach for ESPN's sports highlights and ABC News updates and provide another outlet for video snippets taken from the ABC broadcast network and ABC Family cable channel shows." Disney "hopes the arrangement will bring its advertisers to YouTube, a site that has 100 million monthly visitors but has had difficulty making money off 'user-generated content.'" YouTube Dir of Content Partnerships Jordan Hoffner: "Ultimately it puts more content in front of our users that ABC and ESPN are able to monetize. It's one of those where everyone wins." Chmielewski notes providing a "dedicated channel on YouTube where familiar names such as ESPN or ABC can be watched might allay advertiser concerns that their brands and products would end up adjacent to unsavory content" (L.A. TIMES, 3/31). In N.Y., Brian Stelter reports Disney will "sell and control the advertising on the video clips, and split the revenue with YouTube." The ad formats will "include 15-second commercials before the video starts, overlays and ads next to the video player," and YouTube will be "embedding ESPN's video player, the first time the video site has used a third-party player" (N.Y. TIMES, 3/31). YouTube currently is sampling a "four-minute segment about fantasy baseball" from ESPN (HOLLYWOOD REPORTER, 3/31).

LONG-FORM TALKS TOO: PAID CONTENT's Kramer reported Disney is continuing discussions on a deal that "would put ABC's long-form content on YouTube," though no announcement is forthcoming. Disney also reportedly is negotiating with Hulu (PAIDCONTENT.org, 3/30). The N.Y. TIMES' Stelter notes Disney "refused to comment on reports that it has held talks" with both YouTube and Hulu about "distributing full-length episodes of shows" like "Lost" and "Desperate Housewives." A source said that Disney is "in negotiations with Hulu to take an equity stake in the site," which is a joint venture of NBC Universal and News Corp. (N.Y. TIMES, 3/31). The WALL STREET JOURNAL's Vascellaro & Holmes cite a source as saying that Disney's talks with Hulu are "continuing and unaffected by the YouTube deal." The source said that the talks "didn't include content from ESPN" (WALL STREET JOURNAL, 3/31).

RIGHT WHERE IT SHOULD BE: BROADCASTING & CABLE's Paige Albiniak wrote the "wall is coming down," as the ABC/ESPN deal is "further proof of the power of YouTube, with 41[%] of online video market share." Short-form content "should be ESPN's bread and butter -- whatever great play happened the night before now will be available on ESPN and ESPN.com but also on YouTube." Online video consumers "have grown to expect such things to be on YouTube -- it behooves Disney not to disappoint its ravenous fans" (BROADCASTINGCABLE.com, 3/30).