The Hulu Carousel Continues

/ Jul 2, 2013

HuluArnett

In what should come as a surprise to absolutely nobody, the Hulu sales process has hit a potential hitch due to the demands being made by the video service’s current owners, Disney and News Corp.*

According to a report from TheWrap yesterday, final bids for Hulu, which are due Friday, might come in well below the $1 billion Hulu owners are seeking. This is because of a list of “onerous” demands which would essentially gut the Hulu service.

The owners want to be able to take content off of Hulu and license it exclusively elsewhere as well as limit Hulu’s first-run rights by instituting a 30-day delay for new episodes of some TV shows. Hulu owners also want to license programming to Hulu for only two years (instead of the minimum three that most bidders are requesting). This would allow them to raise prices for programming when it’s time to renegotiate.**

And if that’s not enough, Hulu’s current owners also want to sell 90% of inventory tied to their programming on Hulu, and want at least four ads per break on their shows on Hulu Plus.

And they want at least $1 billion with all of these terms included.

This has shades of the first Hulu bidding war in 2011, when Google, Dish Network, Amazon, and Yahoo! vied to buy the service before owners ultimately decided to pull it off the block. Dish Network had offered $1.9 billion, which was said to be the highest official bid. That doesn’t include Google’s offer of roughly $4 billion, which came with requests for longer licensing agreements for more programming — terms that were beyond the parameters set by Hulu owners.

It’s the same old story, down to the potential of Hulu owners once again killing the bidding war — especially if bids come in lower than asking price. This means a site that has been in limbo, even before founding CEO Jason Kilar decided to leave the company, might remain so for the foreseeable future.

The prospect of Hulu owners keeping the service also calls into question what sort of investments the video service would make in original programming. Hulu’s Newfront slate was largely underwhelming, which some people within the industry credited to the company not knowing what its future was. Two months later, and everyone is still asking those same questions.

An argument can be made that a Hulu sale, even with the aforementioned laundry list of provisions, could be a benefit to Hulu’s plans for original programming. The thought is: If the new owner(s) doesn’t have access to the same amount of TV content, then they need to provide original fare that will keep users coming back. It’s the Netflix strategy, and could quickly become one for Hulu, provided it has the resources in place to make a significant bet in original online programming.

Of course this depends on which bidder Hulu goes to. For example, DirecTV isn’t a stranger to original programming, which it offers alongside other exclusive stuff on its DirecTV Audience Network channel, VOD platform, and mobile apps. Earlier this year, DirecTV premiered its first original series, the Thandie Newton-starring “Rogue,” on the Audience Network. Last month, it renewed “Rogue” for a second season. DirecTV has notably rescued and aired new seasons of cult shows like “Friday Night Lights” and “Damages” (something which Netflix isn’t unfamiliar with). And the satellite provider has also partnered with Fox Digital Studio on multiple seasons of sports comedy series “Suit Up,” repackaging it into a TV-length show for the Audience Network after an initial run on the web.

Yahoo!, which has its own slate of original content, could also be a good buyer. Though that’s looking unlikely. Other potential buyers include The Chernin Group (maybe with AT&T), Guggenheim Digital, KKR & Co, Time Warner Cable (which is only looking to invest), and Silver Lake Management in partnership with William Morris Endeavor. Some are more likely to push Hulu further into original programming than others.

Final bids are due Friday, and they might come in well below the $1 billion asking price (or not). And as we learn which bidder (if any) wins, it will also signal what role Hulu plans to play in online programming.

*Comcast also has a stake in Hulu, but no operational oversight due to FCC regulatory terms it agreed to when it bought NBCUniversal from GE.

**It’s important to note that regardless of how accurate these demands are, it could also be a negotiating ploy as both sides haggle over the price.

Tags: , , , , , , , , , , , , , , , , , , , ,


AlecShankman_VideoInk_300x250

Digital Dealmakers: Alec Shankman – Shaping the Then, and...

 
Digital video industry news today

News to Know: theAmplify Acquired, Hulu Orders...

 
Allen_Debevoise_300x250_VideoInk

Power Sixer: Allen DeBevoise Continues to Push Third Wave of Media

 
Webby Awards took place last night!

Five Branded Content Takeaways From the Webby Winners

 
Industry Tickets Selling Fast!
Click above to lock in your registration for VidCon 2015!
 
YouTube Money

YouTube Cries Uncle: Videos Will Earn Revenue While Content ID...

 
Jonathan Skogmo, Jukin Media

Power Sixer: Meet Jonathan Skogmo, Jukin Media’s King of...

 
DreamWorks Animation

Controlling Interest in AwesomenessTV in NBCUniversal’s...

 
Wet Hot American Summer Netflix

Netflix Orders More ‘Wet Hot American Summer’

 
Judy McGrath Astronauts Wanted

Power Sixer: Meet Judy McGrath, Astronauts Wanted’s Lead...

 
Amina_Canter_VideoInk_300x250

Digital Dealmaker Amina Canter Is Bringing Traditional Chops to...

 
Studio71 Paramount

Digital Influencer Features Make the Majors with...

 
JC_Cangilla_VideoInk_300x250

Who’s the Man Behind Newform Digital’s Many Deals?...

 
Machinima hired James Glasscock as SVP of Strategy and Business Development

Questions & Answers with 2016 Digital Dealmaker James Glasscock

 
Univision Creator Network

Univision Creator Network Now Has Beauty and Fashion Vertical

 
Flula Borg

YouTube Music Star Flula Borg Signs with Studio71

 
Susanne Daniels

Power Sixer: Meet Susanne Daniels, the Force Behind YouTube Originals

 
JimmyMaymann

Power Sixer: Meet AOL’s Global Kingpin Jimmy Maymann

 
Dealmakers2016_600x250

Introducing the 2016 Digital Dealmakers

 
kendall_rhodes01

Dealmakers 2016: Kendall Rhodes from Untitled Entertainment

 
PowerSixer2016

Introducing the 2016 Power Sixers!

 
FilmStruck

Turner Teams with Criterion for FilmStruck SVOD Service...

 
Jason Goldberg STX Entertainment

STX Taps ‘Punk’d’ Creator Jason Goldberg to...

 
oculus for consumers

How quickly will online video transition to VR?

 
Bret Easton Ellis Fullscreen

‘American Psycho’ Author Bret Easton Ellis Signs Up...

 
Netflix_new

Netflix Begins Production on ‘Okja,’ Sparks...

 
walkinthewoods3-xlarge

Amazon Signs Multi-Year Output Deal with Broad Green Pictures

 
DollarsMoving_VideoInk_300x250

Why Getting TV Dollars to Go Online Is Easier Than You Think

 
INTX_300x250_VideoInk

Why Disruption Is the New Best Friend of the Online Video and TV...

 
Tyler James Williams RePlay New Form Digital Go90

Ex-‘Everybody Hates Chris’ Star Talks Going Mobile...

 
All Def Digital

All Def Digital Launches In-House Creative Agency Targeting...

 
Facebook Live Cafe Latte Tastemade 2

Because It’s Facebook, Stupid: Why Facebook Live is...

 
TrevorStevens_VideoInk_300x250

‘Rock Steady Row’ Feature Gets Picked Up By SUPERGRAVITY

 
Bryan Cranston, Eric Berger, Kate Bosworth and Dennis Quaid at Crackle’s upfront presentation held at the New York City Center on April 20, 2016.

Crackle Unveils Originals Slate, ‘Break-Free’ and...

 
NathanBrown_VideoInk_300x250

Nathan Brown Lands at Discovery Digital Networks

 
RYOT

AOL Acquiring VR Studio RYOT to Bring Immersive Video to...

 
Abrams_Talent_300x250

Abrams Artists Adds Two Talent To Alt Programming Roster

 
Seeso_Logo_VideoInk_300x250

NBC’s Seeso Looks to Boost Audience Via Amazon Prime Deal

 
Tidal

Tidal Announces New Original Series With BET —...

 
Microsoft Pulse

Microsoft Wants Companies to Take Video Pulse to Measure Engagement

 
SawyerHartman_200x200

Exclusive: Sawyer Hartman Signs with Untitled Entertainment