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Hulu's non-sale melodrama: symptom of US TV industry malaise Hulu's non-sale melodrama: symptom of US TV industry malaise
(2 months later)
The annual summer Allen & Company gathering in Sun Valley for media CEOs has a reputation as a place where deals are made and announced. This year, it will be remembered for the deal unmade and reverse announced: Hulu, offered to the market with great drumbeat, is back on the shelf.The annual summer Allen & Company gathering in Sun Valley for media CEOs has a reputation as a place where deals are made and announced. This year, it will be remembered for the deal unmade and reverse announced: Hulu, offered to the market with great drumbeat, is back on the shelf.
The billion bucks its owners – 21st Century Fox, Disney, and NBC Universal – were being offered wasn't enough to pay for the embarrassment that someone else might make it successful and undermine their own businesses still further.The billion bucks its owners – 21st Century Fox, Disney, and NBC Universal – were being offered wasn't enough to pay for the embarrassment that someone else might make it successful and undermine their own businesses still further.
Two years ago, the owners had bought out a fourth partner, the Private Equity Firm, Providence Capital, at a sum that valued the whole enterprise at $2bn. Once before, in 2011, a sale was floated, but that, too, was shortly tabled.Two years ago, the owners had bought out a fourth partner, the Private Equity Firm, Providence Capital, at a sum that valued the whole enterprise at $2bn. Once before, in 2011, a sale was floated, but that, too, was shortly tabled.
In other words, the partners have, in six years of operation, been unable to resolve conflicts and competitive issues with their own core businesses – the resolution of which might have allowed Hulu to prosper. Nor have they been able to sell it for anywhere near the amount that would make it difficult for someone else to show them up (and adequately reward them for playing the fool).In other words, the partners have, in six years of operation, been unable to resolve conflicts and competitive issues with their own core businesses – the resolution of which might have allowed Hulu to prosper. Nor have they been able to sell it for anywhere near the amount that would make it difficult for someone else to show them up (and adequately reward them for playing the fool).
This is not so much business failure – although it is that also – but deep, pained, frustrated ambivalence. Don't want it; don't want someone else to have it. Hmm, what to do?This is not so much business failure – although it is that also – but deep, pained, frustrated ambivalence. Don't want it; don't want someone else to have it. Hmm, what to do?
The new lack of strategy is to announce a further investment from the combined partners of $750m, a figleaf and arbitrary sum that is meant to suggest a way forward, but without any real ability to do anything else but more of the same.The new lack of strategy is to announce a further investment from the combined partners of $750m, a figleaf and arbitrary sum that is meant to suggest a way forward, but without any real ability to do anything else but more of the same.
Hulu was begun, as many responses to would-be disrupters are, as a combined initiative of the dominant players: our businesses are being threatened at the margins by new streaming media services, so let's use our collective clout to start one of our own. Take that upstarts!Hulu was begun, as many responses to would-be disrupters are, as a combined initiative of the dominant players: our businesses are being threatened at the margins by new streaming media services, so let's use our collective clout to start one of our own. Take that upstarts!
The problems with this approach are predictable. The partners have different interests and agendas and don't really want to be in business with each other – at least, not one where none is in specific control. So, they soon come to conduct a low-level cold war.The problems with this approach are predictable. The partners have different interests and agendas and don't really want to be in business with each other – at least, not one where none is in specific control. So, they soon come to conduct a low-level cold war.
What's more, they don't want to compromise their own business model. Thus, in this instance, they have continued, even in the paid version of Hulu, to sell advertising – whereas the lack of advertising is precisely one of attributes propelling the streaming model. And when push comes to shove, none of the partners really wants to commit their own content to Hulu if a better price for it comes along.What's more, they don't want to compromise their own business model. Thus, in this instance, they have continued, even in the paid version of Hulu, to sell advertising – whereas the lack of advertising is precisely one of attributes propelling the streaming model. And when push comes to shove, none of the partners really wants to commit their own content to Hulu if a better price for it comes along.
The end result of their efforts has been to build a half-hearted business whose primary accomplishment is to help legitimize the streaming model and increase the demand for it. And that has redounded most of all to the benefit of its major competitors, Netflix and Amazon.The end result of their efforts has been to build a half-hearted business whose primary accomplishment is to help legitimize the streaming model and increase the demand for it. And that has redounded most of all to the benefit of its major competitors, Netflix and Amazon.
To boot, the partners were not willing to make licensing commitments of the present content long enough in order to sell the company at a price that wouldn't appear to be a humiliating loss. Worst of all, the likely final bidders turned out to be Peter Chernin, the former top executive at 21st Century Fox (formally News Corp), and DirectTV – in other words, the most nettlesome purchasers.To boot, the partners were not willing to make licensing commitments of the present content long enough in order to sell the company at a price that wouldn't appear to be a humiliating loss. Worst of all, the likely final bidders turned out to be Peter Chernin, the former top executive at 21st Century Fox (formally News Corp), and DirectTV – in other words, the most nettlesome purchasers.
Heads would role, or at least great embarrassment would ensue, if Fox allowed a former executive (the present top executive, Chase Carey, being, of course, measured against his predecessor) to make a success of its own asset. Likewise, satellite broadcaster DirectTV was promising to use Hulu as the basis for retailing content in a way that the Hulu partners had decidedly mixed feelings about. (NBC Universal is now owned by Comcast, which, in seeking approval for that deal, was forced for competitive reasons to become a silent Hulu partner. But, duh, Comcast is a direct competitor of DirectTV, and surely wouldn't want Hulu used to open up a new front against it.)Heads would role, or at least great embarrassment would ensue, if Fox allowed a former executive (the present top executive, Chase Carey, being, of course, measured against his predecessor) to make a success of its own asset. Likewise, satellite broadcaster DirectTV was promising to use Hulu as the basis for retailing content in a way that the Hulu partners had decidedly mixed feelings about. (NBC Universal is now owned by Comcast, which, in seeking approval for that deal, was forced for competitive reasons to become a silent Hulu partner. But, duh, Comcast is a direct competitor of DirectTV, and surely wouldn't want Hulu used to open up a new front against it.)
Hence, the partners have now resolved, if such a word can be used among such partners, to sort of do with Hulu what DirectTV seemed to want to do: make it a platform for what is now known, abstractly, as television everywhere. That is, on some kind of subscription basis and by some yet to be determined agreements, Hulu will become the way that you might get the content of Disney, Fox, NBC, and anybody else who might want to join in, on all your devices.Hence, the partners have now resolved, if such a word can be used among such partners, to sort of do with Hulu what DirectTV seemed to want to do: make it a platform for what is now known, abstractly, as television everywhere. That is, on some kind of subscription basis and by some yet to be determined agreements, Hulu will become the way that you might get the content of Disney, Fox, NBC, and anybody else who might want to join in, on all your devices.
Maybe.Maybe.
The devil, of course, is in the details of the variations of such plans and platforms. And, likely, there will still be advertising. What's that about?The devil, of course, is in the details of the variations of such plans and platforms. And, likely, there will still be advertising. What's that about?
Additionally, there is the abiding possibility that one partner will bolt for a better deal and sell his content to … a competing service. Oh, and Hulu is now talking about making original content, as Netflix and Amazon are, putting it in curious competition with its managing partners – who are makers of original content. Care to imagine those meetings?Additionally, there is the abiding possibility that one partner will bolt for a better deal and sell his content to … a competing service. Oh, and Hulu is now talking about making original content, as Netflix and Amazon are, putting it in curious competition with its managing partners – who are makers of original content. Care to imagine those meetings?
And, then too, there is the basic trend of video content, which the Hulu partners understandably remain ambivalent about: a la carte selection, meaning you only pay for what you want. That undermines almost all the assumptions of entertainment distribution, which is their primary business.

Nothing has changed, in other words. Hulu is in an impossible position, between a rock of one way of selling content and a hard place of another, which undermines the first model.		And, then too, there is the basic trend of video content, which the Hulu partners understandably remain ambivalent about: a la carte selection, meaning you only pay for what you want. That undermines almost all the assumptions of entertainment distribution, which is their primary business.

Nothing has changed, in other words. Hulu is in an impossible position, between a rock of one way of selling content and a hard place of another, which undermines the first model.
So, we have Hulu in limbo. Another constant reminder of the media abyss.So, we have Hulu in limbo. Another constant reminder of the media abyss.
It prompts, in the eternal dark night of media second-guessing, the inevitable question:It prompts, in the eternal dark night of media second-guessing, the inevitable question:
Who's bright idea was this?Who's bright idea was this?
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