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Hulu Owners: ‘Love the One You’re With’

7 Aug, 2013

Corporate executives express renewed appreciation for the online content aggregator

Sounding a bit like the chorus line to 1970 folk hit “Love the One You’re With,” 21st Century Fox president Chase Carey and Bob Iger, CEO of The Walt Disney Co., expressed separately their newfound admiration for Hulu.com — the online content aggregator they (and Comcast) have tried to sell twice in the past two years.

In the Disney fiscal call Aug. 6, Iger admitted the protracted private auction of Hulu (and subscription video-on-demand subsidiary Hulu Plus) again illustrated the platform’s value to third-party suitors, regardless of their unwillingness to bid into the 10-figure stratosphere for a brand with limited content rights, among other issues.

“During [the sale] we became more and more convinced that there was real strategic value to Hulu and there was value from a financial perspective, meaning we could grow it at a rate that would be overall positive for the shareholders of our company,” Iger said.

It has never been disclosed why Disney and Fox wanted to unload Hulu for the first time in 2011 and then again earlier this year. Scuttlebutt suggested Disney considered Hulu a threat to its evolving digital ecosystem, which includes a pay-TV deal with Netflix, set to begin in 2016.

If anything, Disney favored implementing Hulu with an ad-supported business model. Fox appeared more interested in mainstreaming Hulu Plus’ $7.99 monthly subscription — thereby envisioning incremental revenue from an evolving digital landscape.

Third owner Comcast is precluded from direct decision making with Hulu as part of its agreement with federal regulators when it acquired NBC Universal.

After reportedly rebuffing Dish Network in the first aborted sale process, and DirecTV in the most recent go around, Hulu’s parents agreed to infuse it with $750 million of new capital, which Iger said is aimed at strengthening the management team, technology infrastructure and content portfolio.

By comparison, Netflix and Amazon spend billions a year licensing content.

“We think that there is considerable opportunity here and that opportunity will bode well for Hulu, [and] also for content owners who will have a robust platform to sell the content to and for the creative side who will have another entity to sell programming to, or to create for,” Iger said.

In 21st Century Fox’s Aug. 6 fiscal call (first since breaking away from News Corp.), Carey said the company had always realized Hulu’s intrinsic value and opportunities within digital distribution. He said the specific issues surrounding co-ownership of the platform revolved around agreeing to a unified strategy going forward.

“Partnerships are complicated,” Carey said. “As we went through this process, we found [that] all the constituencies coalesced around a vision how to really build this in a way that it could be something exciting for content owners, something that could be an exciting addition to the digital marketplace, and something that could enhance the existing ecosystem.”

Regardless, Time Warner CEO Jeff Bewkes, in the company’s Aug. 7 fiscal call, said Disney and Fox were correct to hold onto Hulu. He said protecting the value of programming while expanding broadband content delivery do not have to be exclusionary strategies.

“We think the move of television to an on-demand service on television and on broadband devices is a major move to support the value of TV networks and TV programming,” Bewkes said.

That said, the CEO believes the move toward over-the-top broadband TV distribution is in its infancy, and as of yet unviable to sustain as a business model.

Bewkes said he still isn’t sure if Intel Corp. will actually launch a broadband platform, while adding that Time Warner is in conversations with Apple “all the time” regarding alternative distribution channels into the home.

“There are no [OTT platforms] that we know of that are interesting opportunities in our view,” he said.

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