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News Corp. COO Chase Carey Embraces SVOD — With a Hulu Twist

8 Dec, 2011 By: Erik Gruenwedel

Executive eying larger role for Hulu that would include major theatrical movies

Chase Carey, president and COO of News Corp., joined a growing bandwagon of media companies eager to generate incremental revenue from license agreements to subscription video-on-demand platforms, albeit with a stipulation or two.

Speaking Dec. 7 at the UBS Global Media and Communications conference in New York, Carey said 20th Century Fox’s heretofore cautious approach toward SVOD services like Netflix was an attempt to not chase a “quick buck or a cheap buck” at the risk of long-term revenue growth.

“We weren’t the first one in because it is not the goal to be the first one to do a deal with these guys,” Carey said. “[It’s more important] to do smart deals, [and] to take advantage of things we feel are additive to our larger business.”

Specifically, Carey said News Corp. is eyeing its ownership stake in Hulu (and SVOD unit Hulu Plus) as an opportunity to do more than just chase digital dollars. He said that while being in a partnership with the online repurposed website is a bit of a “bear to manage,” having a franchise with the reach, brand and audience that Hulu has is something most people dream of.

Hulu, which had been put up for sale during the summer, was taken off the market after co-owners NBC Universal and The Walt Disney Co. realized the platform’s long-term opportunities exceeded short-term returns from a sale.

“The opportunity to take that, build upon it and expand on it … and have a leadership position really dwarfed the [acquisition] values being put on it,” Carey said. “I think it’s worth us trying to figure out [if] we can navigate this thing and learn from some of the growing pains we’ve had and really continue to build. We look at Hulu as something that can really be a part of our growth story and a really new dimension for our content and brands as we navigate these digital arenas.”

The executive credited Netflix with creating a “viable” SVOD business model that acts as an alternative channel for repurposed — not current — TV programming. Fox this year began licensing select content (“Sons of Anarchy”) to Netflix and Amazon Prime. Fox also is pursuing distribution of content on YouTube’s nascent branded channel platform.

“To me Netflix is a channel with a different content experience. … It’s not the home run to go rushing after,” Carey said.

When asked why Fox and other Hulu partners don’t pursue a platform challenging HBO, Showtime and other pay-TV channels, Carey wouldn’t comment directly, but appeared to embrace the concept.

The executive believes Hulu affords Fox an opportunity to move beyond a “me too” digital business and pursue what he believes are underexploited revenue streams for movies during the first 12 months of release. Carey said the challenge is to take advantage of electronic distribution and create proper windows with the right offerings. He said DVDs and Blu-ray Disc play an important role (he credited physical media for the success of “24”), but offering “a rich electronic experience” and monetizing it is just as important.

“We have to do a better job of not having our product priced at a dollar [at rental kiosks] five or six months after theatrical release,” Carey said.


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