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Hulu's old media owners (DIS, CMCSA, FOXA) have decided not to sell the company, or even a stake...

Hulu's old media owners (DIS, CMCSA, FOXA) have decided not to sell the company, or even a stake in it, and will instead provide a $750M cash infusion while maintaining their current equity positions. Reported demands for a slew of streaming/licensing restrictions likely helped scuttle buyout/investment talks with the likes of DirecTV (DTV), Time Warner Cable (TWC), and AT&T/Chermin (T), much as they helped scuttle 2011 talks. Netflix (NFLX +4.4%) is probably pleased. (previous)
Comments (18)
  • James Sands
    , contributor
    Comments (1811) | Send Message
     
    Disney, Comcast, and Fox are not going to sell to a distribution competitor.
    12 Jul 2013, 01:29 PM Reply Like
  • Drew Robertson
    , contributor
    Comments (308) | Send Message
     
    DirecTV (DTV), Time Warner Cable (http://bit.ly/1b7jqdl), and AT&T/Chermin (http://bit.ly/nD01f9)

     

    What were these guys thinking? That all three HULU owners would all at once put a reasonable deal on the table? Come on, this is TV. What a waste of time.
    12 Jul 2013, 03:07 PM Reply Like
  • KATHLEENWILCOX631@GMAIL.COM
    , contributor
    Comments (85) | Send Message
     
    What are they going to do with their "infusion" ?

     

    Let it sit there, and stagnate or WHAT ?

     

    MORE stockholder $$$ down a sink hole !
    .
    12 Jul 2013, 04:21 PM Reply Like
  • Rtracker
    , contributor
    Comments (6) | Send Message
     
    Your 100% wrong.

     

    They will continue building the best online streaming site in the world and purchase more content. You're not looking at the greater picture.
    14 Jul 2013, 11:28 AM Reply Like
  • Sakelaris
    , contributor
    Comments (1176) | Send Message
     
    I found that last statement about Netflix being "probably pleased" to be very interesting. Perhaps the content owners are starting to realize that they cannot do more with the yucky Hulu setup than they already have done. Perhaps the content owners also are thinking of making some more deals with Netflix. All of that would be good. Anyway, what do the rest of you think?
    12 Jul 2013, 05:29 PM Reply Like
  • James Sands
    , contributor
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    I think Hulu has an operational advantage potentially based on accessible content from Disney, NBCUniversal, and Twentieth-Century Fox. Since Hulu is private, we don't know how much they pay for content. I can't imagine Hulu is charged what Netflix would be by these three companies.

     

    Second, Hulu generates over $300 million from advertising revenue. Netflix will have a hard time integrating advertising into their model since they have chosen to exclude it, but it will happen sooner or later. Content and advertising go hand in hand, always have, always will.

     

    If Hulu were to get acquired, it would be by a private entity, not a distribution competitor like DirecTV or Time Warner Cable. Hulu's costs would more than double if the company were acquired by a cable or satellite distributor.

     

    I think Hulu will stay private, until the three companies possibly take it public.

     

    Netflix pays a lot of money for content $5.7 billion off-balance sheet. Unfortunately we can't see Hulu's operations, but I'm guessing that Disney, Comcast, and Fox would be smart to minimize content costs for Hulu while being owners, and look to exploit Hulu once sold off.

     

    Disney, Comcast, and Fox already pay an amount to produce all of the content they create. Hulu allows them to add $700 million between the three from this content cost, as Hulu grows it's basically incremental added revenue and higher margin less operating expenses.

     

    Plus the three companies could have just been looking at market value based on Netflix's drastic increase over the recent time frame, testing the waters.
    12 Jul 2013, 05:43 PM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    As this Market Current correctly points out, the $1B deal fell apart because the owners wanted to sell the platform with limited ongoing licensing commitments (http://lat.ms/16z1W2C). This means 2 things: 1) streaming platforms don't have a lot of inherent value and 2) content owners know their licenses alone will garner more than $1B, with the steady licensing cost escalation we've seen. How either of these things are buy signs for NFLX is a mystery.
    12 Jul 2013, 06:31 PM Reply Like
  • James Sands
    , contributor
    Comments (1811) | Send Message
     
    Digital,

     

    Thanks for the link. I beg to differ on the value of a streaming platform as it provides true content access anywhere; since content owners are not willing to provide subscriptions without cable or satellite connections.

     

    I think content owners should think a little more about how much revenue satellite and cable companies get at their expense of content versus gaining more licensing or distribution revenue from other distribution entities.

     

    Long-term I don't see a need for Netflix or Hulu as streaming platforms, in my opinion, content owners will further consolidate to create their own platforms. Hulu could morph into this over time if all three stay as partners or one buys the others out entirely.

     

    http://bit.ly/10PPPQ2

     

    Your take on my article would be greatly appreciated as you are well versed in this industry.
    12 Jul 2013, 08:52 PM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    Thanks, JS. I look forward to reviewing your article. I agree with you about the importance of a streaming platform--I am a huge advocate of cloud-based entertainment services. I just think that these things can be built or bought for tens of millions, not tens of billions...
    12 Jul 2013, 08:57 PM Reply Like
  • JayBlisk
    , contributor
    Comments (44) | Send Message
     
    The streaming content providers do provide a product anywhere however contingent on a high speed internet connection. IMO this is the worst high flying stock of the year slightly ahead of Tesla
    14 Jul 2013, 12:40 AM Reply Like
  • Rtracker
    , contributor
    Comments (6) | Send Message
     
    The reactions here are interesting. Hopefully this isn't a surprise to anyone but the "new world" is online video and yesterday, the cold war, just turned into full on war for control of this space.

     

    Netflix is a fine service, but every time they have to renegotiate rights for content, they're gonna have to write bigger and bigger and bigger checks because Hollywood has a limitless appetite. Too bad Netflix only has one way to make money.

     

    What people also tend to forget is that TV is a stream of commercials that are rudely interrupted by programming. Once you understand that, then you have a better view of the BUSINESS of the TV BUSINESS.

     

    Ad revenue helps these shows get made. Ad revenue is why TV stations around the country pay BILLIONS of dollars to buy shows to run them in early morning, daytime, fringe, early fringe and late fringe.

     

    In this age of Entertainment - Ad Revenue is Eternal. And the Ads must flow.

     

    If this new world is going to be created you GOD DAMN better believe there are gonna be some fu@#!*% ads on, in and around that world. BELIEVE IT!

     

    Hulu is positioned to make sure that Ad Revenue can exist and be maximized in that new world. And as that new world continues to be explored and populated, Hulu will continue to share that ad revenue with show owners and producers which in the end will pay them more than Netflix and Amazon, forcing them to either add ads to their services or try to keep up by writing even bigger checks that will be backed by pixie dust and hope.

     

    You guys keep playing baseball, Hulu's game is probably chess, thinking 5-15 years down the road, instead of only the next quarter.
    14 Jul 2013, 11:28 AM Reply Like
  • Sakelaris
    , contributor
    Comments (1176) | Send Message
     
    You predicted in your earlier comment that Hulu will become the "best online streaming site." Well, a lot of folks may argue with you about the ads. As for myself, I am also bothered by something else: Hulu greatly limits the selection of available episodes of each TV show. I cannot stand that!

     

    Maybe Hulu will someday grow up and give us the episode choices that we want. If not, I hope to be able to keep using Netflix streaming and Netflix DVDs. Of course, it sounds like you are rooting for that to be taken away from me...
    14 Jul 2013, 02:11 PM Reply Like
  • JayBlisk
    , contributor
    Comments (44) | Send Message
     
    Your comments are my thoughts exactly. I was talking to a fellow IT friend last night and we both agreed ads will be apart of Netflix business model before it is over and hopefully for Netflix sake not to late.
    14 Jul 2013, 03:53 PM Reply Like
  • Sakelaris
    , contributor
    Comments (1176) | Send Message
     
    In my comment above, I focused on episode selection, not ads. But concerning ads, my immediate question is why Netflix does not use some generally unobtrusive ad delivery methods open to it now. It has room on the inside and outside of its DVD envelopes for non-Netflix advertising--usually there is none. On the Netflix TV displays that give a brief synopsis of the movie or show, a small ad could be placed. On the margins of the web page for our queues, various small ads could be placed.
    14 Jul 2013, 04:06 PM Reply Like
  • James Sands
    , contributor
    Comments (1811) | Send Message
     
    Rtracker hit it above. Advertising is why we have programming, not the other way around.

     

    Using Discovery as an example, if they didn't have advertising revenue, they wouldn't be profitable. I'm assuming same would go for most cable network companies and broadcast companies. This would also impact filmed entertainment being supplied to networks.

     

    Then there would be no programming for Netflix to have created its business model around.

     

    Advertising is vital for content to shift online, Hulu knows this as the company was created by major networks. Video advertising is going to be a huge catalyst for streaming in my opinion. Players to consider are Brightroll, Liverail.com, Adap.tv, the following article provides some information on video advertising stats (2nd table):

     

    http://bit.ly/18faTl5

     

    These companies mentioned above have been active on the SEC, but are still private. Tremor Video (TRMR) just went public as a competitor, but I would wait to see financial info from the others as they are more established. Currently Netflix is missing a big piece of the pie. Whether it is due to a lack of long-term vision or a stubbornness is anybody's guess.
    14 Jul 2013, 04:19 PM Reply Like
  • Rtracker
    , contributor
    Comments (6) | Send Message
     
    Hulu doesn't limit anything... its the people who own the media that set the limitations.
    14 Jul 2013, 04:53 PM Reply Like
  • Rtracker
    , contributor
    Comments (6) | Send Message
     
    And no, I don't have ill feelings towards Netflix, but they have some big decisions to make soon because the landscape is rapidly changing.
    14 Jul 2013, 04:53 PM Reply Like
  • Sakelaris
    , contributor
    Comments (1176) | Send Message
     
    But Hulu is OWNED by several of those big media companies! For whatever reason, they want to keep a lot of their episodes locked up at any give point.
    14 Jul 2013, 05:00 PM Reply Like
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