Fox to Limit Next-Day Streaming on Hulu to Paying Cable Customers

Starting Aug. 15, the Fox network will limit next-day streaming of its shows to paying customers of approved cable and satellite distributors. Those customers will be able to log in and watch episodes of “Bones,” “The Simpsons” and other shows the day after they appear on TV; all others will have to wait eight days.

The limitations, announced on Tuesday and bemoaned by fans of Hulu, are a significant change to the online television system. At least one of Hulu’s other network partners, ABC, is contemplating setting a similar limit, according to people with knowledge of the discussions.

For Fox, a unit of the News Corporation, the new limitations are driven by a desire to protect lucrative deals with cable and satellite distributors. Increasingly, distributors are paying monthly fees for Fox programs through retransmission agreements, and they dislike the fact that many of the programs are free online.

By putting an eight-day delay in place, Fox is appeasing the distributors and supporting what is known in the TV industry as an authentication model for online streams of shows. Cable channels like ESPN and CNN are implementing a similar model, which requires an individual to authenticate that they are a cable or satellite customer before streaming a show or a channel. Through authentication, traditional distributors hope to keep customers paying for monthly TV service while making it possible to access a wealth of content online.

Fox’s announcement marks the first instance of authentication by a broadcast network. To make authentication work, programmers and distributors have to work together and in some cases sign new contracts; that’s why Fox announced only one distribution partner on Tuesday, Dish Network, which has a subscriber-only Web site for streaming TV, DishOnline.com.

All other cable and satellite customers will be affected by the eight-day delay until Fox lines up other participating distributors. Network executives declined interview requests on Tuesday, but they acknowledged privately that many viewers would be disadvantaged, at least temporarily, by the strategic shift.

Mike Hopkins, the president for affiliate sales and marketing for Fox Networks, said in a statement that the change was about providing a product to “enhance the value of pay television to subscribers.”

While the four-year-old Hulu, a joint venture of the parents of Fox, ABC, NBC and the investment firm Providence Equity Partners, is profitable, retransmission agreements with big distributors are much more profitable for the networks. With the eight-day delay, Hulu, which is known to be for sale, is effectively being placed second in line behind the traditional distributors.

News Corporation executives had signaled previously that they were considering placing limitations on the free episodes that Fox supplies to Hulu. This summer, Fox signed a contract to continue supplying Hulu; the terms were not disclosed, but analysts believed the contract allowed for further delays of episodes and heavier ad loads.

Hulu declined to comment on Fox’s announcement on Tuesday. The Web site has both a free service and a paid service, Hulu Plus, that includes full seasons of many series. Hulu Plus, which costs $8 a month, has almost one million subscribers.

A Fox spokeswoman said Hulu Plus would not be subject to the eight-day delay. But the company’s news release notably did not mention Hulu Plus, as if trying to discourage that option for next-day viewing.