ITV closes on Hulu deal for UK launch

ITV is reportedly close to agreeing a deal to take a stake in the US video on demand joint venture Hulu and make its programming available for a UK launch.

Backed by NBC Universal, News Corporation and Disney, the VOD service has been considering entering the UK market ever since Project Kangaroo was blocked by the Competition Commission back in February.

For this aim, Hulu is believed to have offered ITV a significant equity stake in its UK operation, which could be over 25%. In return, ITV Productions would free up rights to place its content on the service.

A source close to the deal told The Daily Telegraph: "ITV is closest to signing a deal with Hulu which will have a level of exclusivity built into it. Hulu has been in talks with all the major British broadcasters but has made the most progress with ITV.

"It has offered each broadcaster the chance to take equity in the company in exchange for full-length programme rights."

However, it is understood that a remaining sticking point in the deal is in regards to advertising sales, as ITV wants to retain full control over its sales in a similar arrangement to that agreed between broadcaster ABC and Hulu in the US.

If the ITV deal does go ahead, Hulu is expected to then switch its attention to completing a content deal with BBC Worldwide, similar to the arrangements recently agreed with MSN Video and BlinkBox.

Competition in the UK web TV market is currently gathering pace. Yesterday, Arqiva announced that it had completed its legal acquisition of the technology developed for Kangaroo. The company now hopes to launch its own video on demand platform in the "coming months".

Meanwhile, the BBC, ITV, Five and BT-led video on demand joint venture Project Canvas also told Digital Spy this week that it hopes to launch into the UK market by 2010.