(Updates with closing share prices in 11th paragraph.)
Oct. 11 (Bloomberg) -- Hulu LLC, the video streaming service controlled by Walt Disney Co. and 21st Century Fox Inc., is close to naming Fox executive Mike Hopkins as its chief executive officer, two people with knowledge of the matter said.
The appointment is expected to be announced shortly, said the people, who asked not to be identified because the deliberations are private. Hopkins, president of distribution for Fox Networks and a Hulu board member, would succeed acting CEO Andy Forssell.
With Hopkins, Hulu would gain an executive experienced in negotiating with pay-TV services. The company wants to become an online partner to the industry, giving subscribers mobile and online access to programs, and is developing its own shows. The selection moves Hulu closer to being a media company than a tech player, said Laura Martin, an analyst at Needham & Co.
“The money is in distribution fees from the cable, satellite and telecom industries,” Martin said in an interview. “Mike Hopkins shifts Hulu’s center of gravity away from Silicon Valley and toward Hollywood.”
Meredith Kendall, a spokeswoman for Los Angeles-based Hulu, declined to comment.
Disney and New York-based Fox, the controlling investors, dropped plans to sell the TV service in July and agreed to bolster its technology, buy and develop programming, and build up marketing. The companies, along with Comcast Corp.’s NBCUniversal, a co-owner barred from an active role in managing Hulu, provided $750 million.
That followed an aborted auction in which Hulu attracted takeover bids from pay-TV suitors including DirecTV, Time Warner Cable Inc., and Peter Chernin with AT&T Inc., people with knowledge of the matter said at the time.
Hopkins, as head of distribution, oversees Fox’s growing business of collecting programming fees from pay-TV systems and broadcast affiliates. He was integral in obtaining distribution for Fox Sports 1, a national network that began broadcasting in August.
Under Hopkins, Hulu will focus on building pay-TV fees to complement advertising and subscriber revenue, David Bank, an analyst at RBC Capital Markets in New York, said in an interview. Hopkins has the experience to make Hulu an online portal for cable and satellite providers, he said.
“Mike is one of the few guys who can build momentum for making Hulu an authentication service for the pay-TV industry,” Bank said. “In doing so, Hulu could become the definition of TV online.”
Fox, controlled by Chairman Rupert Murdoch, climbed 1.1 percent to $33.23 at the New York close. The Class A shares have risen 48 percent this year. Disney, based in Burbank, California, advanced 1 percent to $66.21 and is up 33 percent this year. Comcast, based in Philadelphia, rose 1.6 percent to $46.06. Its 2013 gain is 23 percent.
Forssell, who replaced founding CEO Jason Kilar in March, was the company’s senior vice president of content, helping Hulu grow from a startup in 2007 to about $700 million in revenue in 2012, according to a March statement on the company’s website.
Hulu is releasing 20 exclusive and original series this year and plans to boost that to 40 within two years, Forssell said in July. When possible, the service will provide all episodes of a show at once on Hulu Plus, the $8 a month service that has more than 4 million subscribers.
The company, which also attracts 30 million unique visitors a month to its free, advertiser-supported product, is taking a page from its larger competitor, Netflix Inc., which releases whole seasons of new programs at once, letting viewers plow through all episodes quickly.
In order to fund original programming, Hulu needs additional revenue, Martin said.
“It raises the question of whether advertising-driven streaming services will ever be successful without the support of subscription revenue,” Martin said.
--With assistance from Jonathan Erlichman in New York. Editors: Rob Golum, Stephen West