After all the speculation about
unhappiness and a bidding process, Hulu’s owners aren’t going anywhere. The trio has decided to turn down all offers and maintain ownership, while collectively committing an additional
$750 million to the venture.
The announcement by Disney, 21st Century Fox and Comcast’s NBCUniversal puts to rest several years of speculation that the owners were frustrated with the
asset and wanted to unload it, which they recently attempted to do with interested parties that reportedly include DirecTV. Comcast has a non-voting share, so the final decision to hold onto the
property was likely made by Fox and Disney.
Clark Fredricksen, VP and researcher at eMarketer, concluded that Hulu’s premium programming "still gives it an advantage over many other
players in the video advertising ecosystem. Advertisers remain most comfortable placing high-quality, expensive video ads near TV shows and films, rather than user-generated, news media or syndicated
content often found on video ad networks."
The 5-year-old venture offers content from the owners -- both with a free and paid offering -- and has been expanding into original content. The
owners reported that Hulu has 30 million-plus monthly unique visitors and posted $690 million in revenue last year.
“Hulu and its investors are in a funny position. Periodically, Hulu
finds itself with the need to raise money and then rumors of a possible sale surface. Such a sale would transform its biggest investors into its biggest competitors. Time will tell if this might be a
great example of sunk cost value, or in for a penny, in for a pound," notes Susan Bidel, senior analyst at Forrester Research.
Chase Carey, COO at Fox, stated: “We believe the best
path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure." He said that despite "meaningful conversations with a number of
potential partners and buyers," 21st Century Fox and Disney are "fully aligned in our collective vision and goals for the business.”
Fredricksen also noted that a competitive,
fragmented market meant "Hulu faces stiff competition from subscription services like Netflix, as well as YouTube. The growing role of set-top boxes and consoles as a video-streaming devices is also
encouraging cable channels, film and TV studios, and other video content owners, to develop their own apps for TV -- rather than through licensing on Hulu.”
Gartner analyst Andrew Frank commented that it was interesting that Hulu's owners “decided
that Hulu’s strategic value outweighed its cash value -- its strategic value being to give the content owners a stake in controlling the future of digital distribution, rather than selling that
stake to the distributors, which comprised the principal bidders for Hulu.”