• by P.J. Bednarski , Staff Writer @pjbtweet, July 15, 2013

I guess by nature, I’m one of those guys who often thinks that if something’s not broken, there’s no reason to throw it out. Maybe you can just make it better.

One of the risks I didn’t take was to wonder aloud why it was the network-owners of Hulu wanted to sell it, which means I was risk-averse about even mentioning I was risk-averse.

Hulu’s owners—The Walt Disney Co., 21 Century Fox (also known as News Corp.), and Comcast --tried once before, and were taking bidders a second time last last week until they called off the auction.  It appears they couldn’t have gotten north of $1 billion for Hulu.  They wanted more. Instead, they say they’ll put $750 million more into it, either just to make it better as a long term investment, or to plump it up to sold later.  

I’d argue they were crazy to sell Hulu at a time of heightened and unprecedented interest in online video, and with OTT and Smart TVs expanding their viewer base--and the advertising community coming to terms with how to count online audiences.

There is a generation that is growing up that has avoided scheduled, network TV—but is still eagerly consuming TV fare via online. Bernstein Research recently asked a focus group of younger people who are cord-nevers how they get content.  Hulu Plus (the pay version) was right up there with Netflix.  Fifteen percent of Hulu’s content is viewed on mobile devices or tablets.

Hulu generated $695 million in revenue last year (it doesn't report profit). Earlier this year, it said it had 4 million subscribers for Hulu Plus, at $7.99 a month. That's no Netflix (30 million) but it's not nothing. And there was always this problem: If you sell Hulu, the network owners strip the site of the preferential rights to network programming. That, in turn, lowers the price. 

An opposite point of view is that each of the companies could do better owning their own service, and that every content-producing entity could too. Maybe so, but to the extent that there are still hot (and not) media companies, maintaining one site protects against falling stars.  Hulu is a great platform for content old and new, all the time.

It seems more like the owners, who otherwise compete as empires containing all of Fox’s networks, ABC/ ESPN and Comcast’s nest of cable and broadcast properties, can’t shake the notion that any single one of them couldn’t do better than their combined effort.  That was, reportedly, Disney’s opinion. (Comcast sort of doesn’t count. For Comcast to get approval to acquire NBC Universal, it had to agree to be a passive investor in Hulu.)

Or maybe the networks think that as long as they own it, Hulu can’t really compete with Netflix with the kind of high profile/highly promoted streaming effort like “House of Cards” or any promotional deals that might be so successful they would harm the core on-air/on-cable products. But that doesn’t make that much sense either. These owners aren’t sentimental broadcasters.  They compete in some places, and cozy up in others. Finally, if they sold Hulu, they wouldn’t have Hulu, a successful, name-recognized streaming video site. What's in a name? Would you really ask that to the owners of Fox, ABC and NBC?     

pj@mediapost.com