China's top search engine Baidu Inc said it plans to start a new independent company to provide licensed online video to Chinese Internet users.

The new company will work with content providers to provide copyrighted video content to Internet users through an advertising supported model, Baidu said.

On Tuesday, Reuters quoted a source familiar with the situation as saying that Baidu is teaming up with Providence Equity Partners, an investor in U.S. video-viewing site Hulu, to set up an online video channel.

In Wednesday's statement, Baidu did not provide details of any partners.

Yu Gong, a former chief operating officer of China Mobile's 12580 business, has been named chief executive officer of the new company, Baidu said.

Shares of the company rose 3 percent to $418.25 Wednesday in trading before the bell on Nasdaq.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Anthony Kurian)