Will FOX Group Acquire 100% Of Hulu In 2013?

With Hulu’s founding CEO Jason Kilar resigning and planning to leave the company in the next three months, rumors abound about his and the company’s future.

Discovery Communications’ J. B. Perrette put it best: “He defied enormous odds, built from scratch one of the top five digital video brands, created two viable and growing businesses (free and pay) and got his well-deserved payday — not bad for five years’ work.” 

So we know Kilar will be fine -- but what about Hulu?

With a corporate ownership group that includes News Corp.’s new FOX Group, Disney and Comcast, literally anything can happen.  But with Comcast having no operational control of the unit (as a result of a government requirement to approve the NBC Universal acquisition by Comcast) and Disney being less-and-less interested in Hulu relative to its other fully owned-and-operated units, then the options for Hulu’s future will likely include:

a)     A spin-off as a publicly traded company.

b)     A buyout of Disney and Comcast by FOX Group.

c)     Death.

Everything being said,  option c is unlikely.  And a  -- while possible -- just doesn’t make sense, because Hulu’s value and comparative advantage lies in the fact that it’s part of big media.  Sure, it could be spun off to raise tens of millions of dollars that could be used to license content, but despite Hulu’s reported $700 million in revenues, it’s still not profitable (oh, disclosure time: my company provides content to Hulu, but I have absolutely no inside information, relying -- like other mere mortals – on the very same articles you have access to).

Incidentally, it’s worth noting that Disney and Comcast (and likely, News Corp. too) are looking to alter their licensing deals with Hulu to be able to license their content to Hulu’s direct and indirect competitors like YouTube, Netflix or Amazon.  As such, it’s possible that part of a change in corporate structure would entail Comcast and Disney giving up equity (some or all) in exchange for no exclusivity. 

Furthermore, Disney and Comcast could maintain some of their content deals with Hulu for good old-fashioned cash, as well as advertising space to promote their programming on their owned-and-operated properties (such as ESPN.com for Disney, and NBCNews.com for Comcast).

As such, common sense suggests that Hulu is now FOX Group’s to lose.  With Kilar leaving, speculation will rise around his successor, and naturally Ross Levinsohn will come to mind.  Levinsohn led News Corp’s acquisition of MySpace, of course.  He left when (if my memory serves me right) then-News Corp. COO Peter Chernin confronted Ross Levinsohn about his investing ambitions.  Levinsohn left to launch Velocity (later renamed Fuse) with Jon Miller, before he landed at Yahoo.  Long story short: Levinsohn is now a free agent and Peter Chernin is gone.  With FOX Group spun-off from News Corp.’s money-losing publishing unit, anything is up for discussion and a cash-rich FOX Group bid on 100% of Hulu would not be implausible.  After all, News Corp. was always a formidable machine, but in light of the publishing unit’s $2.1 billion loss, you can just imagine how profitable the entertainment group actually is.

As well, it’s worth noting that while the press gets caught up in the Facebook-destroyed-MySpace storyline, online video dinosaurs like yours truly will also recall how MySpace was supposed to be Murdoch’s weapon against Google’s YouTube.  Back in 2007, Murdoch spent considerable resources and energy to video-ify MySpace to take on YouTube.  Like all other challengers, that didn’t end too well for the company-not-named-YouTube.

With MySpace eventually floundering and Rupert Murdoch losing his appetite for all things digital, it’s not a given that Hulu will catch FOX’s eye.  But Hulu has proven adept at building two digital businesses when most can’t build one.  Hulu has a free, ad-supported business that won many fans, and it also has a paid subscription service that now drives for a large share of its revenue.  That’s the aspect of the business that has likely wooed FOX Group.

When all’s said and done, it’s clear that online isn’t going to kill television any time soon, but Hulu’s staying power and success does provide the FOX Group with a good place to spend some of its cash while giving it what MySpace failed to provide: a legitimate competitor to online video king YouTube.

Recommend (2) Print RSS
2 comments about "Will FOX Group Acquire 100% Of Hulu In 2013?".
  1. Pete Austin from Triggered Messaging , January 9, 2013 at 8:14 a.m.
    In most of the world, if you click on a Youtube link you see a video. But if you click on a Hulu link you see an error page. So it's clear that Hulu is not even trying to be "a legitimate competitor to online video king YouTube".
  2. Ashkan Karbasfrooshan from watchmojo.com , January 10, 2013 at 1:36 p.m.
    Pete, you raise a very valid point, but it's Big Media and Madison Avenue - focusing on the US only hasn't been a bad idea per se for Hulu.