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May 22, 2024 42 mins

After a tumultuous 2013, Hulu would enter the next phase of its evolution. But corporate maneuvers in huge media empires and growing competition in the streaming space would determine Hulu's path forward. 

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Episode Transcript

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Speaker 1 (00:04):
Welcome to Tech Stuff, a production from iHeartRadio. Hey there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and how the
tech are you? So? In our last episode, I covered
the origins of Hulu, the streaming service that started off

as a joint venture between NBC Universal and News Corp,
two competing media companies. So we got up to twenty thirteen,
which was a tumultuous year for Hulu. Jason Kayler, the
original CEO for Hulu, the guy who really helped shape
what Hulu would become, left the company. His interim replacement

would also leave before the year was over. Mike Hopkins,
who became the new CEO, had formerly been an executive
at Fox Networks Group, and so he came from the
news course of the business. Other changes had also happened
by that point, right, So Disney joined newscre at NBC
Universal and became a joint stakeholder in Hulu. This meant

that three of the four broadcast companies in the United
States were stakeholders. You had ABC, which was owned by Disney,
you had Fox, which was owned by News Corp. And Obviously,
NBC Universal had NBC, so CBS was the only holdout. Also,
Comcast would acquire NBC Universal, which in itself is a

very complicated story. Comcasts first announced this deal in late
two thousand and nine. The initial part of this acquisition
concluded in twenty eleven after a lot but arguably not
enough scrutiny from regulators. But Comcast wouldn't get full ownership
of NBC Universal until General Electric divested its remaining stake

in the company in twenty thirteen. These things are super complicated,
but that's pretty much par for the course for media companies.
If you look back over the corporate ownership history of
any major media company that's been around for at least
a decade, it gets messy. Anyway, Comcast becoming the new
corporate daddy to NBC Universal is why we will later

be talking about a showdown between Disney and Comcast toward
the end of this episode. Another big change also happened
in twenty thirteen that would impact the future of Hulu.
On June twenty eighth of that year, news Core, which
was the media empire of Rupert Murdoch, split in Twain.
That is, newscrep would become two separate companies. Now, one

of those companies, twenty first century Fox, would include the
famous twentieth century Fox film studio, the Fox Television Networks,
and a stake in National Geographic Newscrep would be the
publishing arm of the company. As part of this divestment,
Newscrep transferred its stake in hul to twenty first century Fox.

Now this is the reason we don't have to talk
about Disney, Comcast and newscre at the end of this episode, because,
as I'm sure most of you are aware, Disney subsequently
gobbled up twenty first century Fox in twenty nineteen, which
means Disney slice of Hulu's high would just get bigger
and bigger. But I'm getting ahead of myself, so Hulu
was also changing outside of these big corporate maneuvers. The

initial business model of Hulu was to offer up ads
supported viewing of recent television episodes. So as a user,
originally you would go to the Hulu website, so you'd
use a laptop or desktop PC and navigate to the
Hulu website. Keep in mind, this is when smartphones are
a brand new thing, so using a smartphone to navigate

the web was still very new when Hulu launched officially
in two thousand and eight. So you would use a
PC or laptop to go to Hulu's website and you
could watch a few of the most recent episodes of
various television programs that were provided by content partners. Typically,
you could view the episode that had most recently aired

on TV anytime between the following day up to the
following month. It all depended upon the actual agreement between
the studio and Hulu. We'll talk about that again in
a bit. You did not have access to the back
catalog of episodes of any show, didn't matter what network
it was on. You might be able to watch the

most recent five episodes, and then on top of that,
you could potentially have access to around half a dozen
other episodes from across the entire history of a show,
but you would have no control over which episodes those
would be. So maybe you'd know for a show that
had lots and lots of seasons, like ten or more seasons,
you might have a couple of episodes from season four,

and then maybe a couple from season six or whatever,
but they wouldn't necessarily connect to each other and wouldn't
be able to say which ones you got to see. Now,
just a little bit more backtracking before we continue on
with our story, because there's some elements that I did
not mention in the last episode. In twenty ten, Hulu
had introduced Hulu Plus, a subscription based service that let
audiences access an entire season the most recent season of

episodes for shows. So you could get access to a
full season of episodes, not the entire history, but at
least the most recent season if you were a subscriber,
and it costs seven dollars ninety nine cents per month.
Now I believe that on Monday's episode, I said nine
dollars ninety nine cents. That's because I was pulling that

from other sources. And to be fair, Hulu has changed
its pricing throughout its history, but the actual initial price
when it launched was seven dollars ninety nine cents per month.
This service was also ad supported, so customers still had
to go through some ads in order to do this.
So you're paying you know, essentially eight bucks a month,
but you also still get ads. So analysts were predicting

that this subscription model was going to fail because who
the heck was going to pay to access television programming
that otherwise they could get for free, although you didn't
really get it for free. You got in return for
whatever your cable or satellite package was, unless you were
actually using antenna to pick up over the air broadcast. Well,
it turned out that Hulu's method worked pretty well. It

did not go down in flames as the analysts were predicting.
In twenty eleven, the service boasted it had hit a
million subscribers, and Kyler said that the service would bring
in around two hundred million dollars after it had been
launched for a year, the subscription service, that is, and
that's a lot of money. But then Hulu was also
spending a lot of money securing content partners, right because

it wasn't just ABC and Fox and NBC that was
providing content to Hulu. Hulu was securing licenses with lots
of different content partners out there, and that cost money.
Cable networks and providers were growing concerned that Hulu was
cannibalizing their audiences, and there was a lot of friction
in the media space. So, for example, in twenty ten,

newscre got into a serious tif with Cablevision, the cable
provider these two companies were in a fundamental disagreement over
retransmission fees. News Core was playing hardball and it ended
up blocking Cablevision subscribers from accessing programming, and that included
online programming. So if you were a Cablevision ISP customer

and you tried to go to Fox dot com to
watch Fox material, or if you tried to watch Fox
material on Hulu, you would get blocked, which made a
lot of people mad. And it really made people angry
that they weren't able to access sports programming because the
World Series of Baseball was coming up and Cablevision was
trying to hold out from having to pay higher retransmission.

This one battle really just encapsulates a much larger story
of traditional media versus streaming media. And keep in mind,
it's kind of funny because traditional media companies were the
owners of the streaming service Hulu. So again, very complicated.
Television had been king for decades, but the cord cutting

trend was really emerging big time. It would only get
worse down the line. Here's a fun side note. Around
the same time, CNN reached out to me to comment
on the trend of cord cutting. So I did I
gave CNN some information about cord cutting and like the
trends that were going on at the time and the
reason for those trends. And I got a talking too,

because at the time, the company I worked for, house
stuff Works, was owned by Discovery Communications, a cable channel
company cable network company, and Discovery did not like that
I was talking about cord cutting, as if some how
I was affecting cord cutting, as if I was responsible

for it. I was commenting on something that was happening,
whether I talked about it or not. And I'm pretty
sure that I was not the reason A bunch of
people suddenly said, you know what, You're right, it is
time we stopped paying cable. So I still think it's
funny that I was talked to about this and that
it was a whole thing because I'm like, you guys

are treating me like I'm way more important than I am,
and if I am this important, you need to pay
me more. Right. That's the lesson you learned, is that
if I'm important enough to be a threat to your business,
I'm important enough for you to pay me more money. Anyway,
that was a tangent side note, doesn't really matter. The
TV based businesses were desperately clinging onto a model that

was just going out of style. Thus the talking to
I got so my personal opinion is that the decline
of broadcast and cable television was inevitable. That nothing that
these companies did was going to stop that decline. It
was just going to happen. So all they could really
do is try and slow things down as much as

they could, or to make things difficult on streaming platforms
which were kind of in an investment and growth mode,
or the traditional companies could try and create their own
strategies to segue into the streaming model, the internet based
model of delivering entertainment. A lot of those media companies

resisted that, or they tried to buy up companies that
were kind of already doing that and use that as
their on ramp. Hulu itself was kind of an on
ramp for that kind of thing. But because these streaming
services were in investment and growth mode, it meant they
were not focused on making a profit at this time.
That was not the main goal of the early years

of these services. They were trying to establish a large
customer base and to scale as quickly as possible. This
was really bad news for the cable industry because it
meant that this new competitor was willing to operate at
a loss. Right, They were not operating with fear of
how it was going to affect their profits because they

weren't profitable. They were operating at a way of gaining
new customers. But the cable industry was looking at a
shrinking customer base and angry shareholders. So they were in
a very different situation, and it was a pretty volatile situation.
We're technically still kind of in that situation, but at
this point, I think most folks acknowledged that cable TV

is seriously on the decline. In fact, you know, Kyler
wrote an essay in twenty twenty three, the former CEO
of Hulu wrote an essay in twenty twenty three that revealed,
quote linear television declines at a rate of close to
ten percent per year in the United States end quote.
And further that quote, the median age for most entertainment

shows was over sixty end quote. And that is the
median age for linear television entertainment. So, if you've ever
wondered why so many TV shows seem to cater to
the elderly. That's why the elderly are the ones who
are still watching television in the first place. Kyler also
said that out of all the streaming platforms in twenty
twenty three, and there were a ton of them at

that point, only Netflix quote is generating material cash flow
from streaming end quote. So Kyler wasn't saying that streaming
was a doomed business model, and I'll try to come
back and touch on that. I just really wanted to
establish the setting that Hulu was part of an early
wave of streaming services that were changing the way audiences

access entertainment and ultimately how they would challenge the status quo. Okay,
we're going to take a quick break. When we come back,
we'll talk more about Hulu's evolution. We're back. So one

thing that I failed to mention in the previous episode
was that Hulu was broadening its access. So again, originally
when Hulu launched, it was a website full stop. And
keep in mind, like Hulu launched in two thousand and eight,
so iPhone comes out in two thousand and seven, we
don't really get the app store until two thousand and eight,

so we wouldn't get into a glut of smartphone and
mobile device apps for a couple more years. The app
landscape was still kind of on the horizon when Hulu launched,
so the one way you could access Hulu content was
on a computer, though if you were willing to put
in the work, you could technically use a television as
a display and watch content on television that way, but

that was kind of janky for most people. It was
beyond the reach of a lot of folks. They would
wait until there would be more integrated solutions, either with
streaming boxes or with smart televisions or that kind of thing.
So you couldn't watch Hulu on television in the early days.
But a couple of years after launch, Hulu began to
release apps and work with device manufacturers to make Hulu

available through other devices, which would include smartphones and tablets
and over the top services as well as like video
game consoles and smart TVs. This wasn't straightforward, however, and
the experience could really leave customers frustrated because Hulu still
had to secure agreements with all the different content providers,

of which there were many, so again, Hulu wasn't just
serving up stuff that could be found on ABC NBC
and Fox, and not everyone would agree to all the
terms and they would require specific exceptions. So for some shows,
viewers might be allowed to access an episode on any
device running a Hulu app like it could be a computer,

a smartphone, it could be or television, doesn't matter. But
for other shows, viewers might only be restricted to the
web browser version on a PC. So it would be
weird because you could log into Hulu on your computer
and watch a show like that, but if you were
to pull up your Hulu app on a streaming service,
like on a box connected to your television, that show

would not be there, and that was really confusing. Also,
shows would have different premiere dates on Hulu. Some episodes
premiered the day after they aired on television, some eight
days after they aired, so the following week. Some had
a delay of thirty days, so like a full month.
And this was all over the place, and it meant
that using Hulu was confusing. This was not the fault

of Hulu, but because the powerful studios could command these conditions,
they were the ones that were dictating the terms. They
felt incentivized to do this because they were, you know,
they were playing in a new space. Even shows that
aired on one of the stakeholder networks on ABC or

Fox or NBC, they weren't immune to shenanigans either. So,
for example, The New York Times reported that The Middle,
which was an American sitcom that aired on ABC, which
belonged to Disney, and Disney was a stakeholder, that show
was not available on Hulu back in twenty eleven. But
why I mean? Like I said, ABC was part of

the major stakeholders in Hulu, so what gives? Well, while
ABC would broadcast The Middle, the studio that actually made
the show was Warner Brothers. So ABC had secured the
rights to broadcast the show, but Warner Brothers made the show.
Warner Brothers declined to have The Middle available on Hulu.
As to why, well, we can only speculate, but chances

are it was an effort to protect the show so
that it could make more money when it was put
into syndication, because syndication is a very lucrative market for
first run shows. So chances are Warner Brothers didn't want
to cannibalize syndication fees, and so they chose not to
have that show available on Hulu. It was and still

is complicated, in large part because of how young the
streaming business was. It was hard to know what would
be important. Now, arguably, it wasn't hard to know what
was important to the audience. The audience wanted access to
their favorite shows. They wanted it to be in a
reasonable way where they're not waiting a month to get

the next or the latest episode. They wanted it to
be cost efficient so they're not spending ridiculous amounts of
money to do it, and preferably they'd like it to
come along without an overabundance of ads. But for the
cable companies, you know, the channels, the studios, the TV shows,
Hulu itself, all the media companies that were part of this,

things were less clear. So the negotiation process was a long,
complex and often it was unique from case to case,
so it was a huge hassle. Honestly, it's a miracle
that Hulu was able to persist at all, particularly when
you consider that ultimately the corporate owners are competitors with
each other other. Stuff that was going on outside of

Hulu would also have a major impact on the general
landscape as well. Amazon's digital video offerings were picking up
steam despite the company changing the service multiple times. So
Amazon started with a service called Amazon Unbox where you
could buy a digital copy of a movie and then
you downloaded it. You weren't streaming it, you were downloading

it to your computer to watch later. But this would
eventually become Amazon Video on Demand. Then it became Amazon
Instant Video, and then it became Amazon Prime Video, but
from Amazon Video on Demand. Further, it was pretty much
the streaming model, so the streaming options were really going on.
By twenty eleven, Amazon Prime members would get access to

Basic Prime Video service as part of their membership, and
that boosted things considerably for that service. Also in twenty eleven,
Voodoo announced that it was launching its own streaming service.
We would also get Twitch in twenty eleven as a
spinoff of Justin TV now. Twitch was and is more
focused on user generated content, primarily centered around gaming, but

not exclusively, so you are not supposed to rebroadcast stuff
like television and films on Twitch. But Twitch is important
because while it didn't directly compete with Hulu as far
as content goes right, it's two different types of content.
It does compete with Hulu when it comes time to
talk about where are customers spending their time and money.

If they're doing it on Twitch instead of Hulu, well
then Twitch is still a competitor, even though you would
argue they're not in exactly the same business. Cable channels
and providers were also creating on demand viewing options for
customers around this time. So, for example, in twenty ten,
HBO introduced HBO Go. This would let HBO subscribers access
on demand HBO programming through a website, app, or digital

media player. Customers had to first authenticate that they were
in fact a pay being subscriber to an HBO package
in their cable television service, then they would be able
to access this content online. Cable providers were doing similar stuff,
allowing customers to authenticate their identity and then access a
suite of content online. So the streaming industry was starting

to coalesce, but it was taking different pathways depending upon
who was behind the service. But now let's skip ahead
a couple of years. So Hopkins had taken over as
CEO at the end of twenty thirteen. The next really
big development in Hulu's history, besides the fact that they
would launch more original content, would come in the summer

of twenty fifteen, and that's when Hulu announced that customers
could pay to access a premium ad on channel. The
first premium ad on channel Hulu would offer would be Showtime.
Now this is interesting from a corporate standpoint because once
again there's a lot of dramatic stuff happening behind the scenes.
You know, forget shows like Dexter or Penny Dreadful that

were on Showtime, The really juicy drama was happening in
corporate boardrooms. So Showtime falls under the corporate umbrella of CBS.
And if you recall, CBS was the one major broadcast
network in the United States that was not a partner
in Hulu because you had NBC, Fox, and ABC, which
again was owned by Disney being the stakeholders of the company.

CBS had tried to go its own way, first with
TV dot Com and then in twenty fourteen, CBS launched
CBS all Access. In twenty twenty one, CBS all Access
would transform into Paramount Plus. Again, the streaming world is
it's despite the fact that the streaming services world is
fairly young, it's not even really more than like twenty

years old. It's incredibly complicated and confusing, especially here in
the United States. So for CBS to agree to license
showtime content to Hulu as a premium add on was
an interesting move. Customers who I wanted this add on
would have to bump up their subscription fee and additional
eight dollars ninety nine cents per month, which is interesting
because that meant the add on costs more than the

basic Hulu service of seven dollars ninety nine cents. However,
it did cost less than it would cost customers if
they got Showtime service through a device partner, because that
fee was set at ten dollars ninety nine cents. Are
you confused yet because I am. Anyway, this seemed to
be an indication that the entrenched old media was becoming

concerned about the future. You know, maybe putting up staunch
resistance to streaming wouldn't work. Maybe it really was inevitable
that streaming would at the very least take a big
old chunk out of TV's numbers, and so media companies
were starting to hedge their bets a little bit. In
September twenty fifteen, Hulu would introduce a new option to subscribers,

So for twelve dollars a month, you could get your
content ad free. Arguably this was a necessary move because
Netflix was running away with it in terms of success
in the streaming space. So around this time when Hulu
introduced this new subscription tier, they had around nine million
subscribers in the United States, which isn't bad, but Netflix

had forty one million at that point. So Hulu needed
a way to gain more subscribers, and the company figured
there were folks who were just bulking at the thought
of having to pay a subscription and still have to
watch ads anyway, So Hulu introduced the tier, so if
you wanted to pay less, you could pay the seven
ninety nine per month and watch material with ads. For

the premium price of twelve dollars a month, you could
get that same stuff but without the ads. And the
hope was that the folks who really didn't want to
deal with ads would now flock on over to Hulu.
And you might be saying to yourself, but hang on,
didn't Hulu also have a way to watch programming for
free with no subscription at all. With ads, you know,
you had fewer options. You couldn't watch full seasons, you

could only watch a few episodes in the most recent
airing of a show, but you still could do that
right for free. Doesn't that undermine the subscription strategy? And yeah,
it kind of did, which might be why in twenty
sixteen Hulu ended the free tier of service. Hulu signed

a deal with Yahoo, which would be allowed to do
what essentially Hulu had already been doing, airing certain television
programs with ads. That one was called Yahoo View, and
it would only include the five most recent episodes of
the various television shows, and those would only go live
eight days after they had already aired on television on

the three partner networks. At Hulu, it also had access
to other network programming, but again the agreements of that
were varied across the board. Meanwhile, over at Hulu, there
was a new stakeholder that was joining the partnership. So,
just to recap, at this point, the three main partners
at Hulu were Comcast, which owned NBC, Universal Disney which

owned ABC, and twenty first Century Fox. But joining them
was Time Warner, which spent a hefty five hundred and
eighty three million dollars for a ten percent steak in Hulu.
This was in twenty sixteen. By the end of that year,
Hulu would hit twelve million subscribers. Okay, this is a

good point for us to take another break, but we'll
be back after our message from our sponsors. Okay, we're back.
I had just talked about in twenty sixteen how Hulu
had hit twelve million subscribers, and that time Warner had

purchased a ten percent steak in the company. Twenty seventeen
was another huge year for Hulu for lots of different reasons.
In May of that year, Hulu launched a beta test
product called Hulu with Live TV Now. As the name suggests,
this service included not just Hulu's library of on demand content,
it also included access to live television programming. The service

also launched with a DVR like feature. Customers who paid
the thirty nine dollars and ninety nine cents per month
subscription fee would get access to the live programming on
demand programming, and they would have fifty hours of recording storage,
so they could, you know, record shows as they were
airing live and watch them later. The live programming included

the four major broadcast networks, which also included local affiliates
in some of the major markets, which is good because
if you wanted to watch the news or something. You
want it to be the news for your region, not
the news for the closest major market. And a bunch
of cable television channels were also included in this, not
all of them, but a lot, and it made Hulu

the first product to carry both live and on demand
programming as an internet based service. And if you wanted
to subscribe to the live service and also opt out
of commercials for the on demand programming, well then you
would have to add in that extra four dollars a
month to your bill. So just like the basic service
which was seven ninety nine or eight dollars a month,

and the premium service was twelve dollars a month, same
sort of thing, you still had to add that four
dollars into your thirty nine and dollars of nine nine
cents per month subscription if you didn't want ads on
the on demand stuff. Now, I mentioned in the previous
episode that Hulu got into the original content game earlier
than Netflix by a couple of years. Netflix's House of
Cards debuted in twenty thirteen. Hulu had been making original

content since twenty eleven. Well, now we're up to twenty
seventeen and Netflix had more than caught up by launching
various prestige series. House of Cards led the way, but
other shows like Stranger Things were also huge hits both
critically and commercially. Hulu didn't just sit back, though. The
company had produced multiple original films and shows as well,

some of which were receiving critical acclaim, and one of them,
the series adaptation of Margaret Atwood's dystopian novel The Handmaid's Tale,
was a smash success. It was a huge hit with critics.
It was very popular, so much so that it was
The Handmaid's Tale that became the first series from a
streaming network to win an Emmy Award. This was a

really big moment for Hulu, and it indicated that original
content made for streaming services could stand toe to toe
with the stuff that was airing on broadcast and cable television.
And it meant that Hulu could claim a first. In
a year when Netflix had two series, it had House
of Cards and Stranger Things in contention for that Emmy

for Best Drama. Following Hulu's triumph was another big shift
in leadership. Mike Hopkins, who had led the company since
twenty thirteen, announced in October twenty seventeen that he would
be stepping down from the company. Randy Freer, who like
Mike Hopkins, was a C suite executive at Fox Networks Group,
actually came over to become CEO of Hulu and he

would stay in that role for just two and a
half years. His departure in twenty twenty would be due
to some other massive changes at the corporate level, which
is what we would call foreshadowing. But I'm going to
go straight to it, so I guess it doesn't really count,
all right, So let's talk about some of these massive
corporate moves that would happen around this timeframe of twenty
seventeen to the early twenty twenties. So in twenty eighteen,

while Hulu was celebrating its tenth anniversary as well as
hitting twenty five million subscribers, AT and T acquired Time Warner.
So this is when Time Warner would transform into Warner Media.
Now you might remember that in twenty sixteen, Time Warner
bought a ten percent steak in Hulu. Well, as part
of this whole transfer with the AT and T acquisition,

WarnerMedia would ultimately sell back its ten percent steak in Hulu.
In twenty nineteen. This would leave the three stakeholders as Comcast,
twenty first Century Fox, and Disney, or at least it
would have, but in twenty nineteen, Disney acquired twenty first
century Fox. This was not a shock, Disney had actually
announced the intent to acquire twenty first century Fox back

in twenty seventeen. The deal would mean that the movie Studio,
twentieth Century Fox, plus several cable channels like FX and
the Fox Networks Group would all transfer to Disney. Also
transferring to Disney would be Fox's thirty percent stake in Hulu,
so that would bring Disney's ownership to sixty percent. Then

you have WarnerMedia selling off its ten percent share, Disney
bumped up its ownership percentage to around sixty six percent,
and Comcast would have essentially the other thirty four percent.
Fun reminder, Jason Kylar, the original CEO of Hulu, would
be heading up WarnerMedia around this time, and he would
continue to do so until Discovery acquired WarnerMedia from AT

and T. I told you these things are complicated. So
the Mouse House thus gained a majority stake in Hulu,
and this pretty much set into motion the events that
would lead to Disney ultimately acquiring the whole shebang, but
that would turn out to be a very, very long
process that technically is still going on today because of
disputes over the value of Hulu itself. Randy Freer stepped

down as Hulu CEO in twenty twenty, and the new
mandate was that whomever led Hulu would report directly to
a Disney executive named Kevin Meyer, who was a direct
to consumer executive over at Disney. Kelly Campbell, who had
been chief marketing officer for Hulu, would become the new
president of the company, and she reported directly to Kevin Meyer.

More on her in just a second. Let's talk about
the myriad of streaming platforms that also were launching around
this timeframe. All right, So Netflix and Amazon had been
going strong for more than a decade in the streaming space.
At this point, CBS All Access was continuing, and then
in twenty twenty one would transform into Paramount Plus. WarnerMedia

would launch HBO Max, which in some ways was the
successor to HBO Go. Disney had actually launched Disney Plus
in twenty nineteen. That raised some eyebrows because it looked
like Disney was competing against itself. I mean, it owned
a stake in Hulu, and then it launches a competing
streaming platform called Disney Plus. They also launched ESPN Plus,

which obviously focused more on sports. Apple had launched Apple
tv Plus in twenty nineteen, NBC Universal launched Peacock in
twenty twenty, And those are just the big streaming platforms.
There are a lot more that we could mention, and
there are also dozens of free ads supported television services
also known as fast services. That's like Crackle or two

B or the Roku channel and more. What I find
interesting is we went from Hulu, which started off as
a joint venture between various media compares ed and we
would end up with Hulu still being a thing, but
the individual competitors had all launched their own independent services.
And obviously this really just boils down to Peacock and

Disney Plus, because Disney gobbled everybody else up. But yeah,
by twenty twenty one, things were very different in the
streaming space and there was a lot more competition for
viewer time and dollars. Andy'll that's tough. Like a lot
of these these services require subscription. They're not free to use,
so they are in direct competition with each other, and

customers were getting frustrated because the original belief was that, hey,
streaming's going to let me access the things I want
pretty easily. But in truth, if you want to access
all the stuff you potentially like, it means you're subscribing
to like half a dozen or more services. Heck, I
subscribe to around that many, and there's some I still
don't subscribe to, which means like, there are shows I've

heard about that I know I would love that I
have never seen because I don't have an account with
that service. All right, So more drama was happening at
the leadership level over at Hulu. I mentioned Kelly Campbell
became president of Hulu in twenty twenty, while in twenty
twenty one she resigned, and two days after she resigned,
she took the job as president of Peacock, the streaming

service from NBC Universal, which of course is owned by Comcast.
And that seemed like shots fired right, Like, she steps
down from Hulu, a joint project between Disney and Comcast,
and then becomes head of Peacock, which is owned by Comcast.
You know, it's it's very odd Well, Joe Early would
replace Kelly Campbell as president of Hulu. Last year he

actually got promoted. He's now President of Direct Consumer Disney Entertainment,
which puts him in charge of all Disney streaming efforts,
so not just Hulu but also Disney Plus. So I
think we're currently done with the various corporate shuffling at
this point for this part of the story. Anyway, who
knows what tomorrow will bring. There were rumors in late
twenty twenty three that Hulu might make another go at

an initial public offering. In the last episode, I mentioned
that there was early talk of a Hulu IPO back
in twenty eleven, but that just never came to be. Well,
neither would the twenty twenty three IPO, because in twenty
twenty three, Disney announced it would acquire Comcast's share of Hulu,
which was around thirty three thirty four percent, and that

the deal was valued at a minimum of eight point
six billion with the B dollars, that's a princely sum. Now.
This would also bring an end to the joint venture
status of Hulu once and for all. Once this deal closes,
Disney had pretty much full control of the company. Anyway
since twenty nineteen because it had acquired twenty first Century

Fox and gained majority ownership of Hulu. Comcast had largely
been a silent partner at that point, but then Comcast
also launched the Peacocks service in competition with Hulu. So
Disney has been offering various bundles that include Hulu and
Disney Plus since two thou nineteen, and has more directly
integrated Hulu into Disney Plus bundles since the company's announcement

that it was going to acquire full ownership of Hulu.
Some have said that Disney's plans to treat Hulu as
its way to deliver the non disney Ish stuff in
its portfolio is the real heart of the strategy. That
Disney Plus will be kept to the more family friendly,
traditional Disney content of the Walt Disney Company, and Hulu

will be like everything else, essentially now for one last
bit of drama. So Comcast has accused Disney of trying
to sandbag Hulu leading up to the transfer of ownership,
So essentially what Comcast is saying is that Disney has
purposefully chosen to favor other deals in favor of Hulu
rather than actually growing Hulu, because if they were to

grow Hulu, Hulu's value would increase, and then Disney would
have to pay more money to Comcast for that thirty
three percent. And I guess you can kind of see
Disney you here if that's in fact true, that you know,
you don't want to invest in making a company more
expensive just because you're going to have to pay that
money ultimately to acquire the very last bit of it.

So why not just let Hulu kind of idle and
keep on keeping on until the deal closes, at which
point then you can pursue efforts to expand the service.
But yeah, still it kind of seems like dirty pool.
And to the surprise of no one, Disney and Comcast
fundamentally disagree as to how much Hulu is actually worth.
Obviously this matters because Disney has agreed to purchase Comcast's

thirty three or thirty four percent stake in the company,
And in fact, Disney has already paid the eight point
six billion dollar minimum to Comcast late last year. But
that was just to cover the minimum, right, we know
that it was going to be more than eight point
six billion. That was just the bottom price. So it's
kind of like a down payment. So Comcast and Disney

each hired firms to evaluate Hulu's worth to determine how
much the final cost of that thirty three percent is
going to be, and as I'm sure you can guess,
the two sides came up with very different answers. Now,
their agreement stated that if their individual evaluations were within
ten percent of one another, the final payout would become

the average between these two values. But that didn't happen
because the two values are not in ten percent of
each other. According to Reuter's. Disney hired JP Morgan to
estimate Hulu's value, and that amount came to twenty seven
point five billion dollars or so. Comcast meanwhile secured the
services of Morgan Stanley, which said that Hulu is worth

more than forty billion dollars. That's a huge gap, twenty
seven point five to forty and it means that the
two companies have to hire an independent third party to
evaluate Hulu again and to determine its quote unquote real value.
I put the reel end quotes because y'all, this all
ends up being at least somewhat subjective, and obviously, like

Disney had an incentive to have a lower valuation so
it wouldn't have to pay as much. Comcasts had an
incentive to have a higher valuation so it could get
paid more. Now, the way this is going to work
is that the third party is going to produce its
own valuation. If that valuation is closer to Disney's number
than those two valuations get averaged together. That determines how
much more money Disney has to pay to Comcast. If

the valuation is closer to Comcast's number than those two
figures will get averaged, and then Disney will have to
cough up the difference, whatever the final damage will be.
Disney will then become the sole owner of Hulu. Now,
this is not the end of Hulu's story, but it
will be the end of it being a joint venture
between media competitors. So will Hulu flourish under Disney or

will we see its offerings diluted due to competition from
other streaming platforms and companies wanting to keep their stuff
exclusive for their own platform that they have launched, Or
are we going to see a sort of return to
the old days, only in the form of bundle that
make online streaming look more and more like cable television,
where you're going to be paying for a access to

a bundle of different services for one monthly fee. I'm
betting that last one is going to be the case,
at least for a little while. But ultimately, I think
audiences are going to decide the fate of these services,
each of which has focused more on creating original content
and migrated further away from being a rebroadcast service. That's
another kind of ongoing through line for all of these

different platforms is that the access to the vast library
of material that has come out before is part of
the strategy, but the thing that attracts new subscribers tends
to be original material that you can't find anywhere else.
So it was interesting to watch that happen first with

Hulu and then with Netflix and Amazon as well, and
now with all these different platforms you can find original
programming on all of them to some degree or another,
that that has become the new approach. Anyway, that is
the Hulu story as it stands now. Obviously it's still developing.
We're gonna eventually get to a point where Disney does

have to pay whatever extra amount is owed to Comcast
and then we've got, you know, Hulu, a Disney company,
and you'll be able to that. You already are able
to subscribe to a bundle of Hulu and Disney Plus.
You are if you're not me. I made a goof
What I did was when I subscribed to Disney Plus,
I chose to go ahead and subscribe for a full year,

which means I can't make a change to my subscription
status until next November. So while I could technically subscribe
to Hulu, I don't want to yet because I'm planning
on changing my subscription to Disney Plus and November to
get the bundle so that I have access to all
that material. But it means in the meantime, I don't

have access to it, because otherwise I'm going to have
to manage even more subscriptions, and y'all, I just I
don't have the brain cells for I'm sure you are
aware of that already, just from listening to this podcast.
One other thing, we will have a new episode on Friday,
but then next week we've got Memorial Day here in
the United States, so I'm going to have some reruns

on Monday and Wednesday, as I will be out of
town and then plan to have another new episode on
next Friday as well. Just wanted to make y'all aware
of that before it happens, and I hope you are
all well. I hope those of you who will be
celebrating a long weekend do so joyfully and safely, and
I will talk to you again really soon. Tech Stuff

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