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.”
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.”