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  • Vincent Marcais

Hulu can save a studio: which one?

The top 4 "Studios", ie 21st Century Fox, ComcastNBCU, Disney and Time Warner, are engaged in a race for survival. They are attacked on both sides: the very old business of making and distributing movies and tv shows, and the plain old business of television network. The key reason why Netflix and Amazon are continuing to draw circles around them is that these 4 "integrated media companies" are in fact heavily intermediated. On their movie side, they lost their Direct-to-Consumer capability in 1948 when the US antitrust took away their ability to own cinemas. On their TV side, they built their network mostly as an ad-supported model and they don't have control of the final consumer streaming behavior data nor credit card. In that context, Hulu's 3 key assets are their (estimated) 20 million US paid SVOD subscribers, their scalable streaming technology and their emerging OTT TV (aka D-MVPD) business. These assets cannot be leveraged in the current set-up with 4 owners (Fox 30%, NBCU 30%, Disney 30% and Warner 10%). Yes, gaining control of Hulu will enable the "winning studio" to make faster decisions and consolidate reporting. But D2C, ie the combination of consumer viewing data and credit cards, is the real bounty. Who will get it? If the AT&T Warner merger eventually happens, this is probably the media group that needs Hulu the least: the mobile side of AT&T gives it national coverage and bundling options, and with enough funding, Warner can accelerate HBO's move into a global Premium SVOD player. Comcast NBC Universal in theory does not need Hulu: they already own the pipe to the consumer. But Xfinity is still mostly a copper & box infrastructure with limited geographic coverage, not a brand that can retain consumer loyalty in an OTT future. So Comcast needs Hulu just as much as the other guys, it is just more difficult for them to admit it. Fox has built one of the best D2C platforms with Sky and its OTT iteration NowTV, but it is limited to 3 European territories, and Fox has lost 8 years trying to secure full control of Sky that still escapes them. They have no D2C footprint in the US. Fox was instrumental in pushing Hulu to go into the D-MVPD business, and the last 2 CEOs of Hulu came from Fox. Fox wants it for sure, but they may have given-up already on getting it. Disney has spent 6 years (from '06 to '12) securing their long-term IP future by acquiring the best portfolio of story-telling brand in the business. The next 6 years ('13 to '19) is all about securing its D2C future. Acquiring Bamtech from the MLB was a key component. But as indicated with market's reaction to Disney's decision to cancel the Netflix deal, even the biggest of the "old media" companies may not afford the time to organically grow its SVOD footprint. Securing Hulu provides the necessary accelerator. The failed attempt at selling Hulu in 2011 showed that none of its current 3 main owners is willing to give up its stake. The current acquisition talks of Fox by Disney or Comcast could well be the trigger that will give Hulu its full value, and enable one Studio to save itself in the current war against Tech.



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