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Hulu is developing a subscription service that would stream feeds of popular broadcast and cable TV channels, people familiar with the plans said, a move that would make the company a competitor to traditional pay-TV providers and other new digital entrants.

Until now, Hulu has offered on-demand programming from major networks, similar to Netflix Inc. The company hopes to launch the new cable TV-style online service in the first quarter of 2017, the people said. Walt Disney Co. and 21st Century Fox, which are co-owners of Hulu, are near agreements to license many of their channels for the platform.

21st Century Fox and News Corp, owner of The Wall Street Journal, were until mid-2013 part of the same company.

Disney's ABC, ESPN and Disney Channel are expected to be available on the service along with the Fox broadcast network, Fox News, FX and Fox's national and regional sports channels. Preliminary conversations with other programmers have begun, but the service isn't looking to offer all the hundreds of channels found in the traditional cable bundle, according to the people familiar with the plans.

Comcast Corp.'s NBCUniversal is also an owner in Hulu, but so far hasn't agreed to license its networks for the planned digital pay-TV service, the people said.

NBCUniversal is a silent partner in Hulu, as a condition of Comcast's 2011 acquisition of NBCUniversal. A Comcast spokeswoman declined to comment.

As consumers continue to seek out broadband-based alternatives to high-priced cable and satellite services, a host of media players are increasingly trying to win over those "cord-cutters."

Hulu sees an opportunity to pitch its planned service to the more than 10 million people who already subscribe to its on-demand service. Consumers don't need to be an existing Hulu subscriber to sign up for the new service, which has yet to be named.

The move would give Hulu's owners a new distribution outlet for their programming. CBS Corp. launched its own service targeting cord-cutters as has Time Warner Inc.'s HBO.

Hulu hasn't set a price for its planned service but Sanford C. Bernstein media analyst Todd Juenger estimated that it would likely cost around $40 a month. An executive close to Hulu said that figure was in the ballpark.

The service will likely also offer a cloud-based digital video recorder and a way for viewers to watch past episodes of shows on-demand, as they can do on many cable and satellite TV services. Hulu is planning on having targeted advertising in its service, according to the people familiar.

Many companies are vying to offer an online version of cable TV in some form. So far, satellite broadcaster Dish Network Corp.'s Sling TV and Sony Corp.'s PlayStation Vue are the only companies to have accomplished the feat with services available nationwide.

PlayStation Vue bundles start at $30 to $40 a month, while Sling TV's is $20. Sling's original service allows users a single stream, but it recently launched a multistream option. NBCUniversal and Disney haven't yet agreed to place their channels on the multistream version.

Cable TV providers have sought to counter the trend by offering their own "skinny" TV packages, such as Comcast's $15-a-month Stream, which allows streaming access to HBO and a handful of broadcast networks.

Still, Comcast and Time Warner Cable Inc. have played down the popularity of the slimmer bundles, saying most of their new customers still sign up for the big bundle.

Besides Sling and Vue, other new entrants in digital TV include Amazon.com Inc., Alphabet Inc.'s YouTube, AT&T Inc., T-Mobile US and Apple Inc.

Many of these players are seeking to deliver a subscription pay-TV package that includes a dozen or so popular channels for a price between $24.99 and $39.99, media executives have said.

Apple, which was seeking to launch such a service last year, has been frustrated in its efforts to license programming from big media companies at rates that would allow it to keep retail prices attractive to cord-cutters, media executives have said.

Write to Joe Flint at joe.flint@wsj.com and Shalini Ramachandran at shalini.ramachandran@wsj.com

(END) Dow Jones Newswires

May 01, 2016 21:55 ET (01:55 GMT)

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