• by Wayne Friedman , January 4, 2017

Moving forward with its forthcoming digital live TV pay service, Hulu has now signed up a key player -- CBS Corp., which includes the CBS broadcast network and cable networks CBS Sports Network and POP.

CBS was a key missing piece. Hulu has already signed up other big broadcast networks -- ABC and Fox -- as well as many cable networks including ESPN, FX, Fox News Channel, TNT, TBS, and CNN, and others.

Founding parent companies -- Walt Disney, 21st Century Fox, Comcast Corp. -- are equity partners in Hulu, each owns a 30% stake. A more recent partner, Time Warner, has a 10% stake. CBS is not an equity partner.

No network carriage deal has been made yet for NBCUniversal networks with its parent Comcast Corp.

The CBS deal is only for Hulu's new live TV service not for Hulu’s existing two on-demand services -- the limited advertising service (7.99/month) and the other commercial free ($11.99/month).

In announcing the deal at the Consumer Electronics Shows in Las Vegas, Mike Hopkins, CEO of Hulu, says the live TV service pricing will be "very competitively priced at under $40 [a month] That will include our $8 [a month] subscription on-demand package.”

He believes the addition of its limited advertising service will help to limit “churn” -- subscribers dropping the service. Hopkins also anticipates having virtually all broadcast affiliates as part of its live TV service.

According to reports, CBS is poised to make $3 per subscriber per month from the Hulu deal  -- rising to $4 by the end of the year, much higher than CBS makes with traditional pay TV companies, cable, satellite and telco providers.

CBS and others will continue to get exposure to younger TV viewers through these digital TV deals. For example, Hopkins says the average age of Hulu viewer is 33. As a result, he says “our ad business has been flourishing.”

Earlier this year, J.P. Morgan’s Alexia Quadrani had estimated Hulu revenues to hit nearly $2 billion in 2016 (57% from subscription fees and the rest from advertising). Quadrani projects $2.4 billion in revenue in 2017 -- 61% from subscribers revenues/39% from advertising.