Chernin Teams With AT&T in Online Video Investment Venture

Peter Chernin was stymied in his effort last year to buy Hulu, the online video streaming service. But now, Mr. Chernin, the former News Corporation president, is teaming up with his partner in that bid to form a new investment venture.

Mr. Chernin’s investment firm has joined with AT&T to commit more than $500 million to a new investment vehicle that plans to buy and develop companies in online video, the parties announced on Tuesday.

The alliance speaks to the scale of Mr. Chernin’s ambitions. A veteran of the media business, he brings operating experience and industry expertise to the partnership. In AT&T, he has found the potential for broad distribution through its customer base and wireless networks.

The group plans to focus on “over the top” video services, which use broadband connections rather than cable or satellite systems, and which are seen as a potential threat to the status quo in television. The investors plan to look at video on demand and streaming services that earn revenue from subscriptions and advertising.

“This is not a venture just to try and do Hulu, or just to try and duplicate Hulu,” Mr. Chernin said in an interview on Tuesday. “Our primary focus is to build operating companies.”

The Hulu bid, while not successful, provided the genesis for the new project. In working with AT&T on the bid, Mr. Chernin said, he realized the partners were “fundamentally aligned.”

“They were very, very focused on growing video as a category for their customers, and I think they see increasing proportions of their network spectrum being consumed by video,” Mr. Chernin said.

After running a sale process last year, Hulu’s owners ultimately reversed course and chose instead to invest more in the business. That was a bitter disappointment for Mr. Chernin. “We didn’t lick our wounds because something went wrong. We licked our wounds because we didn’t feel the process went well,” he said.

Now, Mr. Chernin and his partners have turned their focus to other companies. Along with capital, the Chernin Group is contributing its majority stake in Crunchyroll, an anime streaming company, into the investment vehicle.

The group plans to focus initially on investments in the United States. John Stankey, the chief strategy officer of AT&T, said the group had found some initial targets, but he declined to identify them.

From AT&T’s perspective, the investment venture could one day add significantly to the telecom company’s revenue, Mr. Stankey said. It also is intended to help AT&T stay ahead of broad trends in how customers consume media content.

“AT&T is not going to get involved in something that doesn’t ultimately have a goal of being meaningful in scale,” Mr. Stankey said. “We don’t look for hobbies.”