By Sahil Patel
It’s 2011 all over again as Hulu’s trio of owners, 21st Century Fox, Disney, and Comcast, have decided to not sell the video service to any of its suitors. Instead, they will put $750 million into the video company to “propel future growth,” according to the announcement.
The final suitors for Hulu came down to DirecTV and the combination of The Chernin Group and AT&T, as well as Time Warner Cable, which was only interested in buying a stake in the company. The initial list was much bigger, but over the past couple of weeks, most of them dropped out due to various reasons.
In a statement, Chase Carey, president and COO of 21st Century Fox (formerly News Corp.), said: “We believe the best path forward for Hulu is a meaningful recapitalization that will further accelerate its growth under the current ownership structure. We had meaningful conversations with a number of potential partners and buyers, each with impressive plans and offers to match, but with 21st Century Fox and Disney fully aligned in our collective vision and goals for the business, we decided to continue to empower the Hulu team, in this fashion, to continue the incredible momentum they’ve built over the last few years.”
I promise, you are not stuck in a time-warp.
What’s interesting though is the second half of Carey’s statement, about Fox and Disney being “fully aligned” with what they want to do with Hulu. Does that mean more investment in Hulu’s subscription offering (which Fox has notably favored), or the free, ad-supported half of the video service (which Disney has supported)? Comcast/NBCUniversal, the third primary owner, has no operational oversight due to FCC regulations.
What about reports of a mass executive exodus at Hulu due to concerns over the company’s future?
A recapitalization in the amount of $750 million would signal that Hulu owners have a renewed faith in the service.
As for Hulu’s original programming ambitions, if the current trio of owners remain at the helm, it’s likely that original content will continue to be a side-project for the video company. Hulu’s licensing deals for TV programming are its bread and butter. Hulu’s owners want to control who can access their content as much as it’s humanly (or legally) possible. The idea was that a new Hulu owner, which wouldn’t have access to the licensing deals Hulu currently enjoys, would be forced to invest more in original programming. In other words, Netflix’s strategy for the past year or so. That’s pretty much an after-thought right now.
Hulu declined to comment beyond what was announced in the release this morning.